Maryland has lived a pretty charmed life throughout this financial crisis. Employment is lower and business opportunities are more plentiful here than in most other parts of the country, and many economists are convinced the state is well positioned to weather the economic storm.
Still, I supposed it was only a matter of time before the Free State felt the pinch, too.
Nearly $280 million in mid-year budget cuts proposed by Gov. Martin O'Malley have been approved by the state's Board of Public Works, and that's only the beginning. O'Malley plans to cut another $470 million or so from Maryland's $14 billion budget before Labor Day.
O'Malley apparently is heeding the words of Warren Deschenaux, the legislature's chief fiscal analyst, who called for “prompt action” in a recent letter. “If the budget is to be cut, for most ongoing items, sooner is better than later,” Deschenaux wrote.
The problem, of course, is tax revenue — specifically, a lack thereof, and we have the recession to thank for that.
Spending cuts will bring the budget back into its mandated balance, but here's my question: What happens when the General Assembly reconvenes in January? Deschenaux writes that “in magnitude and urgency, (the situation) is equivalent, if not more substantial, than that which precipitated the special (legislative) session of 2007.” All that session resulted in was $1.4 billion in new taxes.
Fortunately, thanks to the work of MACPA members and legislative volunteers, that tally did not include any sales taxes on professional services. Will we be so fortunate this time? I mean, the state is going to be scratching for every cent of revenue it can find.
That's where Maryland's CPAs come in. We're going to need CPAs to educate legislators once again about the negative consequences of taxing professional services.
That means it's never too early to start planning for CPA Day in Annapolis. The 2010 edition of CPA Day will be held on Jan. 20, and the more CPAs in attendance, the more powerful our message becomes. Mark your calendars now. It's going to be a big day for the profession.
In the meantime, you'll want to attend one of our professional issues updates. MACPA Executive Director Tom Hood packs each session with information that CPAs need to know. Plus, the updates are free for MACPA members and count for four hours of CPE. Check out the schedule here.
What's your take on O'Malley's budget cuts?