What it will take to change Annapolis
In the Nov. 7 story about Maryland Gov. Martin O’Malley’s reelection, “O’Malley charts unclear course for 2nd term,” Aaron C. Davis and colleagues presented an interesting picture of a governor reelected by a landslide but with no clear mandate or plan for his next term. The story contained a misstatement — or, more charitably, a restatement of a widely held misperception — that obscures the need for government reform in Maryland. The sentence said of Mr. O’Malley, “In his first year in Annapolis, he orchestrated the state’s biggest-ever package of tax increases to fix a structural imbalance.” “Structural imbalance” is a euphemism for “structural deficits,” which is a euphemism for deliberate and acknowledged budgeting of government spending into the future that exceeds accepted forecasts of government revenue.
Structural deficits contrast with cyclical deficits, created by revenue shortfalls that result from economic downturns. State and local governments typically run surpluses in good times to create “rainy day funds” to cover cyclical deficits. During his first year in Annapolis in 2007, when the national and state economies were growing, Mr. O’Malley did not “fix” structural deficits created largely by unfunded education spending. Instead, with the support of the large Democratic majority in the General Assembly in regular and special legislative sessions, he used a billion-dollar rainy day fund and a billion-dollar-plus tax increase to cover the revenue gaps in a continuing structural deficit.
These were short-term solutions and did not address the long-term budget problem. In April 2008, less than six months after the General Assembly approved Mr. O’Malley’s proposals, the state forecast a continuation of its structural deficit until fiscal 2013. (This sequence is authoritatively documented in a July 2008 paper, “Avoiding Structural Deficits in Maryland: Recommendations for Reform,” by Cecilia Januszkiewicz, then a senior fellow at the Free State Foundation.) The 2008-09 recession required significant spending reductions to offset a cyclical deficit, but they have not been sufficient to reduce the structural deficits. On Wednesday, the state forecast that structural deficits will continue until fiscal 2016 — halfway through the term of the governor who will succeed Mr. O’Malley.
This is not a record that supports the claim of “good governance” that the governor and his supporters cite as the basis of his electoral success. It is a record that should — as it has in other states and in the federal government — produce competing proposals for fiscal reform, if not a clear-cut mandate to enact them. The Post story, reporting no such proposals as a result of a political mandate in Maryland, probably presented an accurate picture. The Republican opposition in Maryland is feeble, and the governor’s constituency, anchored by government unions dedicated to preserving underfunded pension and health benefits, will adamantly oppose reforms that reduce them. It will probably require a solvency crisis to produce change in Maryland.
Paul Edwards, Towson
| November 12, 2010; 8:21 PM ET
Categories: HotTopic, Maryland, economy
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