Marylanders and Virginians alike should be afraid to bring home this report card: Both states made Business Week’s list of “States with the Worst Budget Shortfalls: Twenty States that Can’t Pay for Themselves.”
Maryland, with a $1.1 billion deficit, equal to about 7.2 percent of its total budget, is ranked the 10th worst state budget shortfall in the country. Virginia and it’s $1.2 billion gap, about 7.1 percent of its total budget, is right behind at 11th.
Business Week editors say they used data from a Center on Budget and Policy Priorities study released at the end of September. According to the magazine, the potential cost for all 31 states facing both major and minor shortfalls could be as much as $53.4 billion.
“Well, we certainly have a budget problem,” said Shaun Adamec, spokesman for Maryland Gov. Martin O’Malley. “It is not the first time that this governor has faced a deficit. The difference is … this one is directly related to the national economic downturn. As that list illustrates, we are not alone; every state in some way is experiencing some budget problems.”
Business Week noted that Maryland legislators approved a $1.35 billion tax increase, the largest in the state’s history, in late 2007, and made $277 million in cuts as well. O’Malley plans to unveil at least $250 million more in spending cuts next Wednesday. Virginia Gov. Tim Kaine announced 570 layoffs Thursday, cutting 800 vacant positions and taking $400 million from the rainy day fund to deal with the state’s $2.5 billion budget shortfall.
Still, neither state has appealed to the federal government for help yet, as California Gov. Arnold Schwarzenegger did when he asked for $7 billion in aid to cover that state’s shortfall.
Adamec said it’s too soon to rule anything out, though.
“It’s not something right now that it looks like we’d need,” he explained, “but the governor has also made clear that who knows what can happen if the national economy doesn’t turn around.”
