At the Edge of the Cliff
At the dawn of this New Year, many expected much more in the way of fireworks from the current 427th session of the Maryland General Assembly. It is an election year and the state is entering another fiscal year of huge budget deficits.
For certain, there are few kinks in the well-oiled, single-party regime that runs the State of Maryland; yet, surprisingly, with the exception of some cult of personality friction, it almost seems like business as usual.
Maryland’s budget problems have teetered on the edge of a cliff for four years now and yet there continues to be no long-term fix.
Instead, the budget has been cobbled together with a series of one-time fixes, fund swaps and ‘found money’ to balance Maryland’s annual budget, which, if it were not for the fact that the General Assembly operates without intense media scrutiny, Maryland’s budgetary approaches would be best characterized as a shame shell game.
At present, the Maryland budget deficit stands at $2 billion. The structural deficit is reported to be $8 billion over the next four years. With the exception of the state’s rainy day fund, there is hardly any money anywhere to be had.
Yes, remember when Gov. Martin O'Malley called a special session in November 2007 to head off, what was then, a projected $1.7 billion deficit.
The enigma persists that in the face of such a profound budget crisis, he concurrently greatly increased spending in urban Maryland, all of which was to be paid for by slots – which he opposed when Gov. Robert Ehrlich was in office, calling them “morally bankrupt.”
In the last several years, much of the budget has been balanced on the backs of county and municipal governments throughout the state.
All of which is quite an irony in consideration of the matter that the otherwise, supposedly non-partisan Maryland Association of Counties and the Maryland Municipal League were just about giddy over the idea of Democrat Governor O’Malley winning the 2006 gubernatorial contest.
The budget cuts have devastated the rural counties. For rural Maryland, the 2007 tax increases have paradoxically resulted in reduced tax revenues and driven retail expenditures and high income Marylanders out of the state.
Maryland’s traditional anti-business reputation has only grown worse in recent years with the addition of burdensome bureaucracy, regulations and taxing schemes.
Just a few minutes’ drive across the border to the south, “Virginia has a pro-business governor and legislature resulting in the 15th best business-friendly climate in the nation. Governor O’Malley’s anti-business leadership has caused Maryland’s business climate ranking to plummet from 24th best to 45th worst,” according to the Maryland Senate GOP Slate, March 7.
Perhaps the only silver lining for rural counties is the one bone the governor has thrown to them by way of the money his budget has set aside in his capital budget for local “bond bills.”
I had the opportunity to visit the Maryland General Assembly opera last Saturday and accompany my wife, who was part of an agricultural organization advocating for state support for infrastructure improvements for an ongoing agriculture facility.
As for the wisdom of including bond bills in the budget, Liam Farrell explained it best in The Annapolis Capital on February 21: “Even if Maryland lawmakers cannot fund everything they want while the state and nation struggle to recover from the recession, senators and delegates are continuing their annual push for local dollars.
“In fact, state’s capital spending – the upfront money and debt issued for roads, schools and other construction – has remained an emphasis this year to help put people back to work…
“Gov. Martin O'Malley's $1.6 billion general capital budget includes $15 million for the legislative ‘bond bills’ that help fund local government and nonprofit projects… the bond bills typically require the group receiving the money to match the state portion with either dollars or equity.”
In other words, the state money is leveraged to maximize economic return for the local economic climate, create jobs, and increase tax revenues from projects and initiatives that will remain in the state and hopefully fill-in some of the holes left in the rural economy by disastrous statewide taxing and anti-business practices.
Unfortunately a war of words, sprinkled with personality clashes and petty political posturing, has muddied the waters. Alan Brody wrote in The Gazette on March 12: “In the House, 22 lawmakers weren't named on any bond bill requests. All but four are Republicans.”
Earlier, on February 17, Mr. Brody noted that “the tiff started last week when Senate President Thomas V. Mike Miller, Jr., (D., Calvert/Prince George's) encouraged members of his chamber to not delay submitting bond bill requests under the assumption that the program would be axed in a difficult budget year.
President Miller is quoted as saying that “the House thinks this is a stimulus … We're not going to get in a war with the House over this issue.”
According to Mr. Brody: “Later, Miller told reporters that he would prefer to suspend bond bills given the current fiscal climate, but that some members across the hall consider them a higher priority, particularly in an election year.”
The challenge, for the rural Maryland counties, is that a stand for fiscal restraint, albeit principled, against the small amount of money in the budget for the bond bills is a penny wise and a pound foolish and will only result in the bond money going to the urban areas of the state.
That is, unless the rural delegates think that they are going to muster the votes to have the bond money removed from the budget and many doubt that is going to happen.
The return on the meager investments just might be the only lifeline available for rural counties to keep the cart from hurdling over the cliff with rest of the state.
Kevin Dayhoff writes from Westminster. E-mail him at email@example.com.