Like a bad cold Maryland can’t shake, big deficits are a part of the state’s fiscal future for the next six years, even if slots revenue kicks in, Warren Deschenaux, the legislature’s fiscal guru, told lawmakers in Annapolis.
“We’re still kissing a billion dollars” in fiscal 2014, Deschenaux said late Tuesday.
“I don’t think we understand completely the direction of the economy. I think there’s a strong likelihood that strong action will need to be taken.”
“Expedient” actions have been taken, such as the budget cuts Wednesday and the past year.
“How are you going to deal with very bad numbers that don’t go away?” Deschenaux asked.
“These are the kind of things I think you’re going to be looking at.”
First, he said, change the funding formulas for local aid, such as Thornton school aid, and modify or reduce programs permanently, as well as freeze salaries and reimbursements.
That includes restraining new spending approved this past year to expand health insurance coverage, create another Chesapeake Bay fund and freeze tuitions.
“The past few years have made policymakers feel good,” Deschenaux said.
“I think these things need to be re-examined.”
He also said the time had arrived to review retirement benefits for state employees, which are still insufficiently funded, even though more than $1 billion a year is put in the pension fund. The same applies to state aid to counties, such as picking up the entire cost of teachers’ pensions.
Gov. Martin O’Malley called Deschenaux’s projections overly “pessimistic,” although he recognized that is his job for the legislature.
Budget Secretary Eloise Foster said the O’Malley administration is looking at more structural changes to departmental budgets.
“We will be asking them to look at what the core mission is” for each agency, Foster said, and identify “things that can be eliminated.”
“We will be making recommendations that the growth of some of the mandates will go down,” she said.
With the bad revenue numbers rolling in, a greater political will exists to consider more drastic changes.
“They have to be” considered, said Senate President Pro Tem Nathaniel McFadden, D-Baltimore City. “Everything is in play.”
“I know that everything is on the table,” said House Majority Leader Kumar Barve, D-Montgomery, even those that “in the past we have discounted as not doable.”
“It all depends on how the economy goes.”
He said legislative analysts have projected gloomy forecasts of structural deficits before that have not appeared.
Del. John Bohanan, co-chairman of the Spending Affordability Committee, said Deschenaux presented “good options,” but he pointed out that “we adjusted multiple formulas” in the past two years.
“If we get no slots revenue and the economy continues downward, we’ve got real serious cutting and adjustments to make,” said Bohanan, D-St. Mary’s.
