Under Charles Lollar, Maryland Could Achieve Elusive Growth

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KENSINGTON, MD- Congress might be stuck in an economic rut, unable to reform taxes, entitlements, education, and regulations. Not so the states. Republican gubernatorial candidate Charles Lollar wants Maryland to join Louisiana, New Jersey, Arizona, and Indiana, among others, in fiscal and regulatory reform.

Lollar was in a cheerful mood at Monday's Labor Day parade in Kensington, a suburb of Washington, D.C. He greeted passersby as his staffers handed out "Lollar-pops" to children. If he has his way, Maryland will be jumping on the economic reform bandwagon. Lollar, an African American businessman, Marine, and former Charles County Republican Party chairman, announces his candidacy for governor of Maryland on Tuesday with a state tour beginning in Mechanicsville, MD.

Lollar told me, "I am running to build an economy that creates jobs by removing obstacles of opportunity. I am running to promote the rebirth of construction and industry by making the state more attractive to job creators and investors, and to stop the erosion of our revenue base. Finally, I am running to promote the value of hard work, purpose, and self-worth."

Under Democratic Governor Martin O'Malley, elected in 2006 and re-elected in 2010, Marylanders have seen over fifty separate tax increases. The Free State even has a "rain tax" on impervious property: owners are charged for any nonabsorbent surface on their land. Tax hikes may make life more difficult for millions of Marylanders, but they have not done much to reduce Maryland's $9 billion structural deficit.

When the economic recovery from the Great Recession began in June 2009, Maryland's unemployment rate was 7.6 percent and Virginia's was 7.1 percent, a difference of half a percentage point. In July 2013, the latest data available, Maryland's unemployment rate was 7.1 and Virginia's was 5.7 percent, a difference of almost one and a half percentage points.

Over the past five years, Maryland has lost multinationals Coventry Health Care, Black & Decker, and Constellation Energy. When corporations relocate to the D.C. metropolitan area, they frequently choose Virginia, such as Volkswagen (2007), Hilton Hotels (2009), and Northrop Grumman (2010).

Into this morass steps Charles Lollar, who unlike the current leadership of both parties sees no need to focus on social issues. "I'm running to be your governor, not your priest," he said. Lollar is focusing on taxation, energy, education, and transportation.

Taxes. Lollar would institute a Taxpayer's Bill of Rights, so that government spending and taxes would not outpace the inflation rate. He would amend the state constitution to require a referendum in order to increase taxes at a faster rate than inflation.

Maryland needs to lower taxes in order to remain competitive. It is practically impossible to sustain high levels of taxes without losing residents and economic activity when neighboring states have lower taxes. Maryland has seen an exodus of taxpayers to Virginia, West Virginia, Pennsylvania, and Delaware, all of which have more favorable business climates. According to the nonpartisan Tax Foundation's State to State Migration Data, based on Internal Revenue Service records, between 2000 and 2010 Maryland lost $5.5 billion in adjusted gross income. Almost $3 billion leached out to its four neighboring states.

The Tax Foundation ranks Maryland 41 in its 2013 State Business Tax Climate Index, compared with 27 for Virginia, 23 for West Virginia, 19 for Pennsylvania, and 14 for Delaware. Maryland needs to catch up.

Energy. Maryland's total energy prices, at $25.22 per million btu, are in the nation's top ten. In order to reduce them, Lollar wants to remove subsidies and allow all forms of energy to compete on their merits. This includes allowing fracking in Maryland's Marcellus shale so that natural gas can lower the state's energy costs. He sees O'Malley's subsidies for wind energy as a way of picking winners and losers in the market, and opposes to the handouts.

Education. Though Maryland is ranked first in the nation by some measures, the state has disparities. Baltimore City schools have a 65 percent graduation rate, compared with 84 percent for Montgomery County, in the D.C. suburbs (and home to Kensington). Poor school systems breed economic inequalities and crime, while contributing to the dangerous notion that hard work is insufficient to get ahead. Lollar would pave the way for school choice by allowing tax dollars to follow the child, and do more to ensure that taxpayer dollars are aimed at teachers rather than administrators. "We have to demand academic excellence," Lollar told me.

Transportation. Lollar is opposed to the Purple Line, a $2.2 billion 16-mile rail project that even the richest Maryland residents are not prepared to pay for. It can only be built with substantial federal and state subsidies, as yet unappropriated: $900 million from Uncle Sam, $400 million from Maryland, and the rest from who knows where. The Purple Line is disliked by some residents because it would displace a popular walking and bike trail, but supported by developers because they think it would enhance the value of commercial property. Instead, Lollar favors small buses, which have high per-person pick-up rates.

Lollar has a long road ahead. In order to win the governorship, he first has to win the primary, in June 2014. The other Republican candidates are Harford County Executive David Craig and Delegate Ron George. The latest Red, White, and Blue straw poll has Lollar narrowly leading Craig, with George significantly behind. Then, he will face the winner of the Democratic primary, likely Douglas Gansler, Maryland's attorney general, or Anthony Brown, Maryland's Lieutenant Governor, in the general election in November 2014. Both Gansler and Brown have more name recognition than Lollar in Maryland.

I asked Lollar how he could hope to get elected in traditionally Democratic Maryland, especially without having held federal or state office. He told me that Maryland will welcome a Marine officer with 17 years of business experience, who will make sure that every taxpayer dollar is well-spent.

America now has five governors who did not hold previous state office: Democrat Deval Patrick (MA), and Republicans Rick Scott (FL), Rick Snyder (MI), Matt Mead (WY), and Brian Sandoval (NV). Popular disapproval of politicians may well help Lollar in 2014. In any case, crowds at Kensington's Labor Day parade welcomed a fresh face.

Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter: @FurchtgottRoth.   

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