Conference Report Defers Budget Crisis 'Til Another Day 4/09

Prior to the beginning of session, there was a hue and cry for this year's session to focus on "budget sustainability."  Together, Republicans and Democrats stated that the budget was in dire straits and committed themselves to reject any actions that could make things worse down the road.

At the Spending Affordability Committee meeting in mid-December, Democrat legislators crowed about establishing the "lowest rate of spending affordability ever" by recommending a .07 growth rate.  Republican Senators argued that the growth rate should be zero.  When House Minority Leader Tony O'Donnell began to advocate for a negative number, he was shut down by the committee chairs. 

Afterwards, the public relations specialist for Speaker Michael Busch berated the press standing in the back of the committee room - don't pay attention to O'Donnell -the media message is this:   the Democrats established the lowest spending affordability level ever set.  Most press reports the next day ignored the Republican arguments for a lower standard of spending affordability.

In the final budget conference committee, did the Democrat leadership meet their spending affordability goal? 

In the arcane rules of Maryland's "spending affordability" statute - yes.  But in the big picture - a really big no.

Under the spending affordability formula, only state funds are counted.  In isolation, spending of state funds declined at a - 3.3% rate.

However, the enticement of manna from the federal government was irresistable.  When you factor in a 21.1% increase in federal spending, Maryland's total funds budget increases by 3.5%.

Moreover, much of the $1.6 billion in increased federal spending is used to balloon Maryland's baseline budget - meaning that ongoing spending is fueled by federal funds scheduled to lapse in two years.

BOTTOM LINE:  This budget blows "budget sustainability" out of the water.  Whatever was done the last three years to cure out-year deficits was squandered by the use of federal stimulus funds this year and next.  When the federal funds expire, Maryland will have to fill the gap with a 10% to 15% growth of state funds just to maintain the baseline.  Obviously, an impossible feat - thus Maryland's budget crisis is just deferred to another day.