Virginia and Maryland are taking starkly different approaches to closing budget gaps this year, with the Old Dominion relying almost entirely on a string of spending cuts and Maryland lawmakers pushing for a multimillion-dollar package of new taxes.
The states' varying routes to balanced books are nothing new. Despite their proximity, Maryland and Virginia have been worlds apart almost since their foundings.
|Sales tax||6 percent||4 percent state; 1 percent local|
|Corporate tax||8.25 percent||6 percent|
|Gas tax||23.5 cents per gallon||17.5 cents per gallon|
|5.5||$500,000 and above|
Virginia's traditionally conservative politics are rooted in its agrarian origins, a pay-as-you-go sensibility that dominated its state legislature even when Democrats ran it. In contrast, Maryland was built up from the urban, unionized docks of Baltimore that produced a long line of liberal big-city mayors whose affection for activist government followed them to the governor's mansion.
"Maryland and Virginia have always been the yin and yang of Washington, but what's happening is Maryland is getting more yin as the years go by," said Stephen Farnsworth, a political scientist at the University of Mary Washington in Virginia. "The gap between the two states is widening."
Facing another budget shortfall, the Democratic-controlled Maryland legislature is poised this month to pass its second set of tax increases in five years, including an across-the-board income tax increase. Across the Potomac, Virginians haven't seen an income tax increase in four decades, whether Republicans or Democrats controlled the General Assembly.
Though Virginia faces similar budget difficulties, lawmakers there never even considered broad tax increases. Virginia Democrats sound very much like their Republican counterparts on taxes, spending and labor unions, in a tradition that dates back to the early 20th century, when Democratic Gov. Harry Byrd's political machine ran the state.
"From the days of the Byrd machine, tax increases were seen as political nonstarters," Farnsworth said. "It's very, very rare for Virginians to approve a tax increase because the central power of this state is in conservative rural Virginia."
The last time Virginia raised a broad tax was 2004, when Gov. Mark Warner, a Democrat, persuaded 17 House Republicans to support higher sales and cigarette taxes to help close a budget deficit. Virginia Gov. Bob McDonnell, a Republican, has flatly refused to support any tax increases.
If Virginia cut as deeply as it could and core services were at risk, "then I say it would be time to look at other revenue increases," McDonnell said. "As tough as our situation has been, we really haven't been to that point."
Across the river, Maryland Gov. Martin O'Malley, a Democrat and former Baltimore mayor, pushed for an 18-cent tax increase on gas, a doubling of the state's water fees and a new sales tax on certain Internet purchases, in addition to the income tax hike.
Tax increases, O'Malley said, are necessary to maintain Maryland's best-in-the-nation public schools and other expensive public services, including the country's 10th-highest per-patient Medicaid spending; Virginia ranks 24th. Maryland raised taxes, he noted, only after he was "able to forge the consensus necessary to do so."
"We understand that attracting businesses and keeping businesses is a slightly more complicated exercise than simply keeping your sales tax or property tax or income tax lower than your neighbors," O'Malley said, claiming Maryland maintains better schools, creates jobs at a faster pace and made college more affordable than Virginia. He called Virginia's low-tax philosophy an "ideological obsession."
"We're not ideological in Maryland," O'Malley said. "Gov. McDonnell subscribes to a much more ideological, no-taxes-on-anything doctrine which he is trying to follow, and we'll see which of the two states create more jobs in the years ahead."