29 November 2011

Md. Alcohol Tax Raised Under False Pretenses--So How About Giving It BACK?

Yeah, remember how, in April, the People's Democratic Republic of Maryland raised the sales tax on your alcohol purchases fifty percent, from 6% to 9%, and then retailers weren't allowed to add it as a separate line on your receipts?
Do you remember what that money was supposed to go for?

Remember that lovely "bait and switch" tactic where the excise tax was proposed with revenues going to specific health programs, and then once everyone got that in their heads and favored a tax increase, it shifted to a sales tax increase to be phased in over three years, with much (not all) of the money targeted to education programs in Baltimore and Prince George's County.
According to stories at MarylandReporter.com (which broke the story) and in the Annapolis Capital, the state's Developmental Disabilities Administration, the Maryland state program that allocates monies to pay for the care and development of those with physical/mental disabilities, received $15 million from that tax increase this year so far.

And it didn't need it:
For more than two years, Heidi Berlin and her husband, Dan, have fought state bureaucracy while seeking help for their developmentally disabled son.
And for more than two years, officials have told the Edgewater couple there isn't enough money in state coffers.
So the Berlins were shocked to learn this month that over the past two years the Developmental Disabilities Administration hadn't spent at least $34 million intended to help people with disabilities - and actually returned more than $25 million to the state's General Fund.
A spokeswoman said the Developmental Disabilities Administration serves about 22,000 people. It operates on a nearly $840 million annual budget, including about $498 million from the state and $342 from the federal government. As a result of the state's new 9 percent alcohol sales tax, the agency received a $15 million boost this year.
Kirkland didn't know why the agency didn't spend the $34.5 million. He said it came to light over the summer as his agency closed its books on fiscal 2011 - which ended June 30.
An investigation is under way by the inspector general of the state's Department of Health and Mental Hygiene and a private consultant. Preliminarily, Kirkland said it doesn't appear anything criminal occurred.
"It just seems to have probably been poor business practices," Kirkland said.
According to an Oct. 28 letter from DHMH Secretary Joshua Sharfstein to legislative leaders, the surplus was the result of the "inappropriate charging" of fiscal 2011 expenditures to the previous fiscal year. When officials corrected the error, the agency first believed it ended fiscal 2010 with a $25.7 million surplus and fiscal 2011 with a $12.6 million surplus.
Upon further review, the agency determined the fiscal 2011 surplus to be only $8.8 million.
The agency was able to forward the $8.8 million into its fiscal 2012 budget, but had to forfeit the $25.7 million under state accounting rules, officials said.
"The underlying problem appears to relate to challenges in the budgeting and payment process in the DDA program, dating back several years," Sharfstein wrote in his letter. "We are hiring new fiscal personnel, reassessing our current budgeting process, and developing plans for an upgraded accounting system."
 The editorial board of the Capital responded with an editorial that, rightfully, calls out the Maryland legislature for its advocating the tax increase on what turned out to be false pretenses, or a "bogus argument":

"What's very hard to swallow is that at the same time that the services were underfunded, we were advocating our support for the alcohol tax," said Nancy Pineles, an attorney for the Maryland Disability Law Center. She and other advocates for the disabled would like to know how a blundering state agency could be sitting on so much money even as this affluent state, according to the ARC of Maryland, ranked an unimpressive 43rd in the nation in spending on services for the developmentally disabled.
The bookkeeping problem, according to state Health Secretary Joshua Sharfstein, goes back for years. And bookkeeping problems are nothing new at the DDA. A legislative audit from two years ago said the agency was wasting millions by overpaying care providers and not seeking federal reimbursement it was due.
So, earlier this year, why didn't it occur to the legislators to ask whether the agency really needed the new tax revenue to help fund services? The DDA currently gets $488 million from the state, and state officials ought to be sure that it's being properly spent before raising taxes to get more.
It is disgusting that state money could be so poorly managed. But it's even more disgusting that people with severe disabilities were denied help while DDA employees falsely claimed that the agency was short of money, then quietly dropped $25 million back into the state general fund.

 A much better question is why the legislators doesn't give due consideration to dropping the sales tax increase?  It's an obvious question, of course, unless you're in the government "company town" that central Maryland is, and apparently believe all money comes from, and goes through, the government to be allocated out to the "people" as the government sees fit.  Besides which, the General Assembly saw to it that too many other sucklings, namely the schools of Baltimore City, Montgomery County (one of the richest counties in the nation, mind you), and Prince George's County, would be feeding on this teat to be able to cut it off completely.

Folks, do you now understand where the "Tea Party" gets its mentality and philosophy?  This isn't based on believing government and taxes are the Devil's work (even if God supposedly only rates/wants ten percent); this is a call for accountability and responsible action with what the governments already take from us.  Before us right now is Exhibit A (actually more like #8,639,742 or something like that) that government is either incompetent in running its own affairs or has made itself too complex to operate efficiently and effectively.  But any serious calls for a rescission of this tax will automatically be met, of course with howls from "liberals" that the tax opponents want to "throw the disabled out into the streets" and "rob poor children of their educational opportunities," or other such overwrought hyperbole.  All over a paltry three percent 1.8 percent of its total budget (recalculated to factor in the Federal appropriation).

(Sincere tip o' the hat to fellow blogger--and anti-government-overregulation activist--Lew Bryson for tipping us off to a story that sailed past our normal search filters by not involving the word "beer" anywhere.....)


RevChris01 said...

Wow, pretty much speechless!

JohnM. said...

"Kirkland didn't know why the agency didn't spend the $34.5 million"

This happens to me all the time, so I can certainly sympathize with the DDA. I'm constantly misplacing an odd million here and there...

All the political blame pointing aside (in my experience, even liberals hate to be lied to), is there nothing that can be done about these "poor business practices?" While I'm certainly more than accustomed to incompetent governmental apparatchiks in Maryland, I'd like to think there's at least some price/for that level of incompetence.

Naturually, I have no hope or expectation that the state will ever rescind the sales tax increase.