Maryland's Budget Morass Includes New Debt & New Spending

 In Illinois, they are raising income taxes and increasing borrowing to solve this problem. Sound familiar? Like New Jersey, they will see taxpayers leave, and revenues fall. We have been there already and feel the sting of that failed policy today. In Maryland, they are borrowing to cover current obligations. And in doing so, they are piling one problem on top of another, reducing the creditworthiness of their state, and creating a crisis that will be larger in the future. Hey, we’ve done that already, too. Today we live with the choking debt service that this failed policy has wrought.

      -      Governor Chris Christie, Budget Speech to the New Jersey Legislature, March 16, 2010

With all the talk about spending restraint in Annapolis, Maryland taxpayers should be aware that “tax & spend” is “alive & well” in state government.

In fact, Governor Martin O’Malley’s penchant to “borrow and spend” became a quip in Governor Chris Christie’s speech to the New Jersey legislature. In contrast to Maryland, Christie’s proposals actually ratchet back the fiscal hemorrhaging in that state’s budget.

In Maryland’s FY11 budget, O’Malley borrows $422 million of cash in special funded capital projects and transfers it to the general fund to cover his deficit spending. Taxpayers will then be saddled with the loans to pay for these projects through state bonds. As Christie notes, this misguided O’Malley budget policy just compounds the structural deficit for future years.

Meanwhile, on the Senate floor, the fund swapping continues as Democrats passed legislation to create a new program through a diversion of funds generated from a taxpayer surcharge on Marylander’s electric bills.

Senate Bill 311 establishes a new program called the “Chesapeake Conservation Corps.” While this bill has a laudable goal of funding and providing volunteer service for youth workers to perform environmental conservation projects, the program would receive over $1 million from a tax on customer electric bills. This tax was originally created for power plant evaluation, research and environmental mitigation.

In the floor debate, Senator EJ Pipkin noted that there are already two existing youth conservation corps programs in state government. “This is redundant . . . and it takes funds away from an important area of power generation, and I urge a red vote,” said Pipkin.

Senator Andy Harris informed the Senators on the floor that during the bill hearing, representatives from the Chesapeake Bay Trust testified that this program can be done with existing resources without the need to raid the funds created by the consumer surcharge tax on electric bills.

“We’re telling our citizens – ‘you know what, you’re not paying enough energy tax because if we have that $250,000 per year in energy tax that’s going to fund this Conservation Corp - it’s just extra money lying around.  We really don’t need it for the intended purpose,’” said Harris. 

Harris urged the Senate to reject the bill and return the extra cash to the taxpayers if it is not needed to study new power plant transmission, generation and electric distribution in the state. “I still have yet to meet a citizen that thinks their electric bill isn’t high enough,” concluded Harris.

The bill passed by a party-line vote of 33 Democrats voting yea and 14 Republicans voting nay.