Stuck With the Reality Check
Recession Forces O'Malley, Kaine to Rethink Agendas

By Tim Craig and John Wagner
Washington Post Staff Writers
Wednesday, January 14, 2009

Maryland Gov. Martin O'Malley and Virginia Gov. Timothy M. Kaine both entered office with ambitious goals to boost spending on public education, transportation, the environment and health care.

But timing is a critical ingredient in any political career, and the collapse of the housing market and the national recession mean that the two up-and-coming Democratic Party leaders will begin their General Assembly sessions today with spending priorities in tatters.

Hampered by projected shortfalls that top a $1 billion in both states, O'Malley and Kaine are being forced to retool their agendas and slash spending for many of the programs they have championed throughout their professional lives.

"It can be enormously frustrating because you can't blame anybody," said former Virginia governor L. Douglas Wilder, another Democrat, who was forced to scrap many of his spending priorities when a recession hit in the early 1990s. "But it can be a wake-up call, and it does present opportunities to do things in a different way."

The election of Kaine in 2005 and O'Malley's the next year ushered in what was supposed to be a progressive era in the Washington region, one in which residents would shoulder more taxes to help ease congestion and improve the quality of life. Kaine and O'Malley took office with a great deal in common. Both are Catholics who built political careers as big-city mayors. They sounded common themes as they campaigned and governed. They even shared political slogans, pledging to "move" their respective states "forward."

Now, Kaine and O'Malley will be together at the forefront of efforts by governors across the country to navigate the worst economic crisis in modern times. Aides to both men said the economic downturn has forced them to reconsider how they govern and to contemplate fresh ways to shape their legacies.

"It bothers him, but he takes it very seriously," said Jody L. Wagner, who served as Kaine's finance secretary from 2006 to last year. "He knows every cut that is being made and is aware of the impacts."

Maryland House Speaker Michael E. Busch (D-Anne Arundel) called the financial strain "tremendously hard" on O'Malley.

"The economy has basically plummeted to the point where he's trying to maintain programs rather than grow policy initiatives," Busch said. "It's challenging and, I'm sure, disappointing."

In Virginia, an estimated two-year, $3 billion budget shortfall will force cuts to education, compromise highway and transit spending, and lead to a reduction in the state workforce.

Kaine, who could not win legislative approval for earlier plans to raise taxes to pay for new roads, has already endured two previous rounds of budget reductions.

When the housing slump emerged in 2007, Kaine had to reduce spending by $641 million and scale back his promise to expand access to health care. Last year, he had to dramatically scale back his plan to provide access to pre-kindergarten statewide. But Kaine said he has left a framework for other governors to build on.

O'Malley, who pushed through a $1.4 billion tax increase in 2007 to help weather a budget shortfall, has been able to make good on several campaign promises during the past two years. Those included a record amount of funding for school construction.

But other initiatives are now in peril. O'Malley told reporters yesterday that education funding might be the only area in which he can increase spending in the next fiscal year's budget, which he is scheduled to present to lawmakers next week. Other programs will be funded at the same level as this fiscal year or will see sharp reductions, he said.

"All of those cuts will be painful, and few things will be spared," O'Malley said.

Lawmakers are considering making cuts in several initiatives O'Malley has launched in recent years. A significant expansion of subsidized health care is at risk, as are plans to increase funding for cleaning up the Chesapeake Bay. O'Malley is planning cuts in local aid, which he has previously vowed to protect.

At a Democratic luncheon in Annapolis yesterday, O'Malley acknowledged the challenge.

"The goals are the same," he said. "The incline on that treadmill's a little tougher."

With money scarce, O'Malley and Kaine have begun to push legislation that can advance their policy aims without incurring costs.

Kaine is making environmental initiatives a focus of the 2009 legislative session, and he will put his clout behind a statewide ban on smoking in bars and restaurants.

O'Malley, a capital punishment opponent, is asking lawmakers to try again to repeal the death penalty, a measure that has failed in past sessions but could help define his legacy in Maryland. His legislative agenda this session also includes an overhaul of domestic violence laws.

Even budget cuts can advance an agenda, Kaine said in a recent interview. To begin reducing the cost of housing inmates, Kaine is proposing to give prison officials discretion to release nonviolent offenders as much as 90 days early. Currently, those prisoners can be released a month early.

"What I have told my team is a crisis is a terrible thing to waste," Kaine said. "When we are in this national recession, let's try to make cuts [that also advance] policy goals."

Political experts said O'Malley has a big advantage over Kaine when it comes to salvaging his agenda. If he can successfully navigate the downturn, he will be well positioned for reelection next year in the heavily Democratic state. A Washington Post poll in October found that 53 percent of Maryland voters approved of how he was handling his job; 37 percent disapproved.

Matthew Crenson, a political science professor at Johns Hopkins University, said he thinks that the governor "is far from finished" politically and that his tenure might look very different by 2014, assuming O'Malley wins and serves out a second term.

"It's going to be awhile before tax revenue starts to flow freely again, at which time he can start looking forward again with a more substantive program," Crenson said.

But Kaine, the new chairman of the Democratic National Committee, will have to look to the national stage if he wants to continue to influence public policy. Under the state's constitution, Virginia governors cannot seek a second consecutive term, so Kaine's efforts to manage the budget will be a cornerstone of his legacy.

Kaine's approval rating hovers around 60 percent in public and private polling, so his inability to ask voters to give him a second term prompts sympathy even from critics.

"With four years, it's very difficult to achieve the goals that you want to achieve," said former Virginia governor James S. Gilmore III (R), who was also hit with an economic downturn at the end of his term.