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November 29, 2011

Maryland budget increase highest in region

Maryland Business for Responsive Government notes that Maryland's budget increase for the current fiscal year, as reported by the National Governor's Association, is 11.4 percent.

That's far higher than the national average for states of 2.9 percent. And it's higher -- but in most cases not greatly higher -- than that of Maryland's neighbors. Virginia's general fund expenditures are rising 7.1 percent this fiscal year. Delaware's are up 9.3 percent. West Virginia's are up 8.2 percent. Pennsylvania's are down 4.1 percent. Here's MBRG's commentary:

According to the report, Maryland has the highest increase in general fund spending between fiscal years 2011 and 2012 as compared to surrounding states Delaware, Pennsylvania, Virginia and West Virginia. Maryland also has the nation's seventh highest increase in the nation during the same period.

Overall, state 2012 enacted budgets will rise 2.9%, while Maryland's will rise 11.4%.

"These numbers clearly show that Maryland has a spending problem. Maryland's political leadership continues to feed the beast with hard earned taxpayer dollars through tax and fee increases instead of looking for cost savings in the budget," said MBRG President Kimberly M. Burns.

"Without an honest, bipartisan assessment of state spending, the budget will only continue to grow out of control and politicians will demand more and more revenue on a continued march towards big government."

Alaska had the highest budget increase for the year -- 21.3 percent. North Dakota was second highest at 20.7 percent. Oil and gas revenue! Read the whole report here. The year-over-year spending changes are in Table 6.

UPDATE: Warren Deschenaux, the General Assembly's chief budget analyst, says the 11 percent increase isn't being spent on new programs. Mostly it's to replace disappearing federal stimulus money. "It's not as though we're improving anything by 11 percent," he said. "We're just maintaining what we had." He adds via email:

Actually the general fund budget increases by $91 million, or 0.6% (less than 1%) when adjusted for three things. First was the replacement of $1.2 billion in federal stimulus funds (largely for Medicaid and education aid) from the American Recovery and Reinvestment Act of 2009. Second, Maryland used $350 million in fiscal 2011 from the local income tax reserve to support education spending (those funds will be repaid over multiple years) which also artificially lowered the base. Finally, the State received $124 million in Education Jobs Funds which allowed the reduction of $124 million in fiscal 2012. Those funds will be replaced in the 2013 budget, but for purposes of consistent presentation are included in the adjusted 2012 budget.

UPDATE: O'Malley spokeswoman Raquel Guillory weighs in.

Maryland growth rate in FY 2012 is distorted by our use of federal ARRA State Fiscal Stabilization Funds for education and public safety in FY 10 ($377 M) and FY 11 ($501 M). Most states spent all of their money in FY 2010 and backfilled with state dollars in FY 2011. Maryland chose instead to prudently spread the dollars over two years (which allowed the Governor to fully fund the growth in education aid in both years). Maryland was thus backfilling for the lost federal dollars in FY 2012 while most other states backfilled in FY 2011.

To avoid the distortions created by the timing of when federal stimulus dollars were spent, we compared the FY 2010 general fund spending of each of our neighbors to the FY 2012 general fund spending. Maryland has increased general fund spending more slowly over the last two years than most of our neighbors.

Maryland’s spending growth across all funds in FY 2012 is only 4.4% (much less than the 11% general fund growth).

The idea is that Maryland would look better in this comparison if it hadn't nursed the ARRA stimulus money over more than one year instead of blowing it all in one wad like some states did. However Maryland would also look better if it had cut more spending to make up for the vanishing ARRA money.

Posted by Jay Hancock at 11:14 AM | | Comments (7)


Some things will never change in Annapolis.

I wanted to let you know in case you hadn't noticed but we are experiencing the deepest recession in memory and with that need for public assistance and state's aid for localities. You would expect the budget to climb considerably. Regarding taxes, if you could get the state to legislate progressive taxation and fees, getting the wealthy in a state of wealthy people to pay their fair share, then like you recommend, taxes and fees for the many will go down.

Could you push for progressive taxation and fees?

"Could you push for progressive taxation and fees?"

As long as they do not effect you eh Cindy?

"Alaska had the highest budget increase for the year -- 21.3 percent. North Dakota was second highest at 20.7 percent." I believe both of these states have "Conservative Republican" Govs.
If the 99% of of Americans, especially the Great Middle Class, would wake up and really look at the state of taxation and spending in this nation, they would see that they are being taken to the cleaners by the Republicans whose sole mission is to feed the 1% Beast (or even the .01 % Beast) with the blood, sweat, tears, and lives of the Middle Class. We've had 10 straight years of the Bush Tax Cuts on the wealthy that was supposed to create jobs for the 99%. The Rep. mantra of "Don't kill the job-producers with higher taxes! They will use the savings from lower taxes to create jobs." LIE! Most clear thinking people would see 8 years as quite long enough to try out this Republican tax plan. It has not worked because it has as its premise that the uber-wealthy will use their trillions to create jobs in the US. just out of the kindness of their gold bullion hearts. It did not happen on 2003 when the huge tax cuts for the 1% started, no jobs were created with this excess wealth from the 1% in 2004, 2005, 2006, 2007, and 2008, before the recession hit. And it is not happening NOW. And don't throw the BS around and regulations, etc. The US voter needs to make a decision about divided government in 2011. It no longer works. So, I say let's have either Congress and the White House either all Dem or all Rep controlled for the next four years. God forbid the latter would come true, but at least something would get done. The voter knows just what they'll get with either party in complete control. They just need to decide which is riskier and then pull the lever.

MBRG=Self-interested, middle-class-hating greedheads. Who cares what they think?

Woodie | November 29, 2011 12:52 PM says it best.

He is an example of the kind of thinking that got us here.

Congress has been Democraticly controlled for the last decade and two years into the Obama transparent and open government we were promised. Most of the money for the green jobs fraud was thrown into the companies that were know to be in trouble before the money was given to them.

These wiz-kids from universities really know how to run a country don't they.

Hope and change? Gotta love that.


I assume that you're joking when you say that, "The idea is that Maryland would look better in this comparison if it hadn't nursed the ARRA stimulus money over more than one year instead of blowing it all in one wad like some states did. However Maryland would also look better if it had cut more spending to make up for the vanishing ARRA money. "

The entire purpose of the ARRA money was to spend it. Cutting back after the ARRA money ran out is simply a Mellon-headed idea. (I am, of course, referring to Andrew Mellon, not making a misspelling of an eponymous reference to a rock group whose music I cannot fathom.)

Hi Stuart: It's just a baseline thing. Porting some of the ARRA money into FY 11 lowered Maryland's FY 11 baseline in a way that didn't occur with other states. (FY11 Maryland general fund spending was lower because they had some federal stimulus money left over.) So comparing Maryland's 11-12 general fund increase with those of the states that didn't have ARRA $$$ left over in FY11 isn't an apples to apples comparison. Just trying to explain the O'Malley's administration's comments about Md's ranking on this particular list. JH

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.

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