Maryland legislative analysts warned Monday that the state’s frequent budget deficits will continue to be a problem until government leaders make tough decisions about how to better align revenue with spending for the long term.
Gov. Larry Hogan (R) announced plans last week to eliminate the state’s most recent shortfall, estimated at a combined $750 million for the current and next fiscal years.
But Warren G. Deschenaux, executive director of the Department of Legislative Services, said Monday that the governor’s fiscal plan does little to prevent future budget gaps or address the root causes of Maryland’s chronic deficit problems.
“We have yet to take the structural actions necessary to sustain a balanced condition, and that, particularly under the circumstances we face today, is problematical,” he said. “Perhaps we need to look a little harder, think a little harder and make harder choices.”
Maryland’s revenue projections have weakened over the past year amid sluggish growth for the state economy, which has put a damper on money coming in from personal and corporate income taxes and the state’s sales tax. Meanwhile, state law mandates that spending increase automatically each year for programs such as K-12 education and the reimbursement rates for care providers who work with the disabled.
For the past two years, Hogan has proposed pausing some of those requirements during years when revenue does not meet expectations, with exceptions for education, reserves, debt payments and the pension system.
Deschenaux said Monday that the plan would do relatively little to address deficits in the long run, saying it amounts to “weak tea.”
Hogan spokesman Doug Mayer acknowledged that the governor’s proposal would not end the state’s regular deficits, but he said it’s “a start, and a great start.”
Deschenaux said the state needs to examine not just mandated spending growth, but also personnel policies, program efficiencies and how forecasters project revenue growth.
The governor’s latest budget, which he released last week, would close the 2017 and 2018 shortfalls in large part by tapping into reserve funds, withholding surplus money that had been slated for the state’s public-pension system and repealing new requirements to provide financial support for several Baltimore programs.
Hogan is also proposing tax relief for military retirees, police, firefighters and emergency-response personnel, something he tried unsuccessfully to advance in the past.
While the governor calls for reduced spending and lower taxes, many Democrats have expressed concerns that his plans would have negative effects on services for vulnerable residents and efforts to improve infrastructure, including roads, bridges and mass transit.
“The governor would grow the structural deficit with his tax proposals,” said Sen. Richard S. Madaleno Jr. (D-Montgomery), vice chairman of the Senate Budget and Taxation Committee. “He refuses to have a discussion about the other side of the ledger. He only wants to balance the budget on the backs of the poor.”
Mayer countered that Democratic legislative leaders have been “consistently defiant about any attempts to control spending” and that they are “unwilling to entertain any kind of budget and spending reform.”
Deschenaux said the governor and legislative leaders need to overcome their differences and agree on some long-term solutions.
“It’s not up to the nerds to fix this,” he said, referring to the analysts in his department. “It’s up to the political leadership to be able to converse and decide things that need to be decided.”