SB 601 - - - HB 1130

March 25, 2004

My name is Dee Hodges and I am honored to speak before you as president of the Maryland Taxpayers Association, Inc. (MTA)

I am a native Marylander, grew up in Montgomery County, and have lived for the past 31 years in Baltimore County. I am also a banker and am proud to hold a Masters in Finance from the University of Baltimore.

MTA appears today in strong support of an amendment to the Maryland Constitution calling for 1) limiting state and local government spending to inflation plus population growth; 2) returning surpluses to the taxpayers; 3) requiring that all tax increases be approved by vote of the people.

Thus, the TABOR amendment allows for government spending to grow at a reasonable pace. There is allowance within the amendment for emergencies. Yet, new spending programs would be subject to careful analysis, while ongoing programs would be tempered by continuous review for efficacy and efficiency.

This proposed amendment is modeled after Colorado's TABOR amendment, passed in 1992. In the five years from 1998 through 2002, Colorado has returned $3.2 billion in surpluses to its people. It did not suffer from massive deficits in the last recession, and it is the number one state for jobs growth and prosperity.

In other words, TABOR works. TABOR works because it forces state and local governments to live within a budget, to set public priorities, to make wiser choices, and to find ways to meet state goals-not by spending more-but by spending smarter.

Some ask: Why put before the voters a constitutional amendment to cap state spending when we could just pass slots legislation and rake in all the new money from gambling that we could ever want?

The answer is this: Aside from the social costs that slots could bring, money is not enough. Money is not enough because many of the government functions in our state are deeply flawed. Our public schools do not teach well or enough. Our over-regulated health insurance system leaves many uninsured while its high costs discourage job creation. Many of our highways all but close down at rush hour, when commuters need them most. The heavy burden of state and local regulation is the real silent killer of jobs and prosperity.

Slots money, no matter how abundant, will only mask-not solve-such serious structural problems.

The solution (which TABOR suggests) is this:

" Maryland needs reform-thoughtful, market-oriented reform-in a great many areas of government.
" The failing public-education cartel needs to competition to bring accountability.
" We need privatization to lower the citizen's cost burden in many areas-from highways to sanitation, from sports facilities to school construction.
" We need to make Maryland more business-friendly in order to increase jobs and put the state economy on a sure footing.

A new infusion of slots money will have a perverse effect-bigger, even more undisciplined government will curtail the creation of lasting jobs.

Elected officials have a fiduciary responsibility regularly to review and evaluate government programs for efficacy, then either to update or to eliminate them.

TABOR will ensure that legislators and public executives pay more than lip service to this responsibility. TABOR's new ground rules will compel us to retool Maryland governments for a better future.

By giving voters the chance to weigh in on TABOR, statesmen legislators will signal that they are putting Maryland on the right path and leaving the old machine politics behind.

Citizens will notice, and thank them at the voting booth.

The Maryland Taxpayers Association, Inc. is the Free State's non-profit, non-partisan, state-wide, grass-roots voice for Maryland citizens. MTA asks Maryland elected officials for their pledge not to raise taxes, acts to make Maryland government more efficient, and provides expert testimony to the General Assembly and other governmental bodies.

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