Maryland has a problem balancing a checkbook.
The state?s $1.5 billion deficit exists because the state committed to spend more than it expects to collect in taxes and fees, said Warren Deschenaux, chief fiscal analyst for the General Assembly.
“Over the long term, the cost of maintaining current services grows faster than ongoing revenues,” Deschenaux said. Revenues are increasing at about 5 percent a year, while expenses are growing at 7.5 percent ? especially for education and health care, he said.
State deficits often happen when the economy falters and tax collections fall, as it happened in 2002 and 2003.
In 2002, the legislature passed the Bridge to Excellence Act, commonly known as Thornton school aid. It was designed to resolve lawsuits over inadequate state funding of public schools. The legislature passed the new aid knowing it failed to provide the money to pay for ever increasing amounts of education dollars to local school systems in future years. This year that aid amounts to $1.3 billion ? almost exactly the size of the structural deficit. A state income tax cut in the 1998 also helped reduce revenues.
In following years, Gov. Robert Ehrlich sought unsuccessfully to pass slot machine gambling to help pay for Thornton. Instead, as William Ratchford, Deschenaux?s predecessor, recently explained it, “These structural deficits were resolved by a combination of transfers from other state funds, reductions in spending, increases in taxes and fees, revenue collections exceeding estimates, and use of the fund balance [surplus] from the prior year.”
