Ehrlich's Budget Plan May Exceed Guideline
Going Beyond 8.9% Growth Is Reckless, Critics Say

By Ann E. Marimow
Washington Post Staff Writer
Monday, January 16, 2006

The budget Gov. Robert L. Ehrlich Jr. will hand off to legislators tomorrow will propose spending at the fastest clip since at least 2000 -- a year that helped tag his Democratic predecessor with the nickname Parris "Spendening."

For the past month, aides to the Republican governor have informally prepared policymakers for a budget that expands state spending by more than 8.9 percent, outpacing the rate a bipartisan panel of the General Assembly recommended last month.

"Whenever you are breaking out of a recession, there's catch-up," said Chip DiPaula Jr., the governor's chief of staff and former budget secretary. "We've deferred an awful lot. Even the State House needs painting."

DiPaula would not comment on the exact amount of the spending plan, so as not to step on the governor's announcement, saying only, "I don't think anybody should be surprised if the governor's budget exceeds that estimate."

But Ehrlich's critics are surprised. Democratic legislators said the rapid pace of growth is inconsistent with a governor who has accused them of a "cocktail party of overspending" and made fiscal discipline a central theme of his tenure and bid for reelection this year.

For two weeks, Ehrlich has traveled the state to share the good budget news with Maryland residents. With a surplus of more than $1 billion to draw on, his plan includes something for everyone: state employees, seniors, disabled people and college students. He is also offering relief for homeowners facing spiraling tax bills.

Del. Peter Franchot, a Montgomery Democrat and candidate for state comptroller, took issue with what he called Ehrlich's famine-or-feast approach to budgeting. The governor has pledged to increase spending on the state's colleges and universities by 14.5 percent in fiscal 2007 -- after having made cuts in his first two years.

"Stopping the progress of College Park and then coming in for an election year photo op and dumping money on them may be smart campaigning," Franchot said, "but it's terrible governing."

Democrats, who control both houses of the General Assembly, embrace several of the governor's initiatives. But increasing overall spending above 8.9 percent, they said, would be irresponsible when budget forecasters expect the state's underlying mismatch between revenue and spending to reemerge in fiscal 2008.

"He's making friends, but I would say the FCC should look into any campaign ad he runs that identifies him as a fiscal conservative," said Del. Richard S. Madaleno Jr. (D-Montgomery), a former budget committee analyst. "He's breaking the bank for many worthwhile things, but who is going to pick up the pieces in 12 months?"

The way those in the governor's office see it, the spending is possible and responsible because the administration slammed the breaks on the budget and trimmed the size of the bureaucracy after inheriting deep deficits in 2002. Now there are bulging obligations to Medicaid and public schools and a healthy surplus. DiPaula said the governor's budget will also set aside some of that surplus for the next year.

The General Assembly's Spending Affordability Committee has met annually since 1983 to suggest a spending limit based on demands for public services and the state's projected amount of tax revenue. The rate of growth it recommends to the governor is just a guideline.

The state's record of spending increases from one year to the next has risen and dipped with the economy -- from a high of 10 percent in the budget passed in 1992 to a low of just under 1 percent in Ehrlich's first year as governor. In Parris N. Glendening's two terms as governor, the rate of growth never hovered above 7 percent, except in 2000, another surplus year, when it climbed to 9 percent.

Last month, the panel set the limit at 8.9 percent, which it said would allow spending to increase by $1.5 billion. Even if Ehrlich's budget stuck to the limit, spending would rise at a greater rate than in any of the past five years.

Some of the GOP's most outspoken fiscal conservatives in Annapolis defended Ehrlich's approach, while expressing reservations about the pace of spending. Eastern Shore Sen. E.J. Pipkin (R) credited the governor with turning around the state's fiscal fortunes but said he has heard from constituents who worry that they won't see enough of that bounty returned in tax cuts.

"It looks like we've got a $1 billion surplus and 6 billion ways to spend it," Pipkin said.

Sen. David R. Brinkley (R-Frederick) said he is concerned about the rapid rate of growth but added that the state had been "given a breather with the economy."

The Maryland Taxpayers Association -- a free-market, low-tax citizens group -- has applauded the governor's vetoes last year of legislation, such as a measure to increase the state's minimum wage. Executive Vice President Richard Falknor said the group is less satisfied with Ehrlich's record on spending.

Instead of looking to expand the budget, Falknor said, the governor should do more to modernize state government. The taxpayer group has suggested converting the state's troubled pension system for state employees into a private 401(k)-style retirement plan.

"He certainly presides over the Maryland Nanny State with more restraint than likely alternative incumbents, and is less driven to extend its boundaries," Falknor wrote in a letter to The Washington Post. "But this may not be enough to energize the Maryland center-right base. They might find such a recommendation tepid."

Staff writer Matthew Mosk contributed to this report.