Budget crisis during an election year?
The impending passage of a balanced budget for the fiscal year that begins in July doesn't look like it's going to mean much when it comes to Maryland's long-term fiscal health. Laura Smitherman reports this morning that the state is on track to face a budget shortfall of $1 billion -- and maybe a lot more -- next year, right before an election.
The state government has a fabulous track record of fiscal stewardship during election years. Like the time it cut income taxes right before Gov. Glendening was facing a rematch with tax hawk Ellen Sauerbrey -- without any plan to cut spending to compensate. Or the time the legislature passed a multi-billion education funding plan just before the 2002 election without identifying a way to pay for it long-term. (Or, as some Republicans snidely put it, the funding source was Kathleen Kennedy Townsend. That worked well.) Or how 'bout this one: Ehrlich's budget in his first year in office grew by 2 percent. The year he was seeking re-election? More than 11 percent.
O'Malley came into office talking a good game about a once-and-for-all reckoning of the state's budget issues, cutting wasteful spending, revamping the tax code for a modern economy and enacting slots. But on the way to passage in the Nov. 2007 special session, the tax revamping mostly turned into a simple sales tax increase (with a bonus computer service tax that got reversed months later), slots became a constitutional amendment that has resulted in lackluster bidding for gambling licenses and the whole thing got packaged with spending increases to make it more attractive to legislators. It produced balanced budgets on paper, but as soon as the economy went south, the plan crashed and burned.
And that was at the beginning of a four-year term.
So what will happen next year? Here's betting it won't be pretty.