The Elephant Cometh

And it won't be content to eat Maryland slots.

NEITHER Maryland Gov. Robert L. Ehrlich Jr. (R) nor his successor, Gov.-elect Martin O'Malley (D), was willing to talk about the elephant in the room during their fall campaigns. But that didn't erase the elephant itself: the enormous projected budget shortfalls the state will face over the next five years. The challenge of grappling with those shortfalls -- closing the yawning gaps between anticipated spending and revenue, as state law requires -- is likely to dominate much of Mr. O'Malley's governorship. Now that it's clear the elephant is getting ready to take a seat on top of him, Mr. O'Malley may care to take notice.

As mayor of Baltimore, Mr. O'Malley has had some experience along these lines. He inherited a large deficit and dealt with it by means of painful budget cuts, better management and higher taxes. As governor, he will find himself having to dig out of an even deeper hole. After a relatively modest projected shortfall in the fiscal year starting next summer -- a $413 million gap on spending of about $15 billion -- things are expected to get worse fast. The annual shortfall is expected to jump to $1.6 billion the year after that, an amount equal to roughly 10 percent of anticipated spending. That huge deficit is attributable largely to soaring spending on education and Medicaid, plus irresponsible tax cuts by Mr. Ehrlich's predecessor, Parris N. Glendening (D).

It's early in the game, and Mr. O'Malley has not yet tipped his hand on how he plans to close the gap. Understandably, as a candidate he was more eager to talk about his spending plans -- more money for health care, stem cell research and higher education -- than about deficits. Still, he will have to start laying the political groundwork soon after taking office. Prudent management and judicious cuts may trim some expenses, but they will not solve a problem of billion-dollar dimensions. Higher taxes, which Mr. O'Malley has wisely not excluded, are almost certainly going to be part of the equation in the next few years if the state is to continue providing services at anything approaching current levels.

What should not tempt Mr. O'Malley is the siren song of slot machine gambling as a panacea for the state's budget problems. For three of his four years in office, Mr. Ehrlich's legislative agenda was thrown into turmoil by his floundering attempts to enact a slots bill in the General Assembly, foiled largely by House Speaker Michael E. Busch (D-Anne Arundel). Mr. O'Malley, for his part, has given conflicting signals about his plans. On the one hand he says that he would intervene for a compromise that would allow a limited number of machines at a limited number of race tracks as a means of supporting the state's flagging horse racing industry and making the issue go away. On the other hand he says that he is "sick of this issue," and that he will not make it a priority. The latter course would be the wiser; given Mr. Busch's ongoing opposition, there is no reason to believe Mr. O'Malley would fare any better than Mr. Ehrlich did.

Slots offer the false promise of enormous pools of pain-free revenue. In fact they are a tax on the poor, and they invite trouble in the form of corruption, gambling addiction, broken families and crime. Thomas V. Mike Miller Jr. (D-Calvert), the powerful state Senate president who has pushed hard for slots, is bound to do so again, perhaps using the state's looming budget problems as a selling point. Mr. O'Malley's best response is to stay on the sidelines and let slots legislation die a quieter death than it has in the past.