Calling Maryland’s recurring spending problems a “structural deficit” is misleading. There’s nothing “structural” about the massive failure of state government to live within its means. During the past four years, Maryland’s state budget increased from $26 billion to $30 billion. The “structural deficit” problem isn’t that Marylanders’ taxes are too low; it’s that Maryland government spends too much.
Republican Gov. Robert Ehrlich faced down a $2 billion deficit left by his Democratic predecessor, Paris Glendening. Now Democratic Gov. Martin O’Malley is staring at yet another shortfall — $1.6 billion next year. The pattern is clear. Ehrlich dealt with the deficit he inherited by raising $3 billion in tolls and fees, including a “flush tax” targeted at cleaning up the Chesapeake Bay, and borrowing against future federal transportation funds. For his part, O’Malley recently ordered his Cabinet secretaries — four of whom are old Glendening hands — to trim a mere $200 million from the $30 billion state budget. This is a PR stunt to make it look like the new governor is serious about keeping state spending under control. But the nearly three-dozen promises O’Malley made on the campaign trail to increase state spending tell a far different — and more accurate — story.
The governor will likely call a special session of the legislature, tell lawmakers he’s made all the “painful” cuts he possibly can, and then ask for tax increases in the personal or corporate income tax, sales tax, liquor tax, cigarette tax, gasoline tax or whatever other tax comes to mind. Legislators might try tinkering with the tax code in an attempt to extract more money from the private sector, or even legalize slot machines after refusing to do so three times under Ehrlich, but none of these “solutions” will solve the basic problem.
O’Malley and the General Assembly should stop the spending binge. The Maryland Public Policy Institute forecasts that state spending will go up 41 percent by 2011, but state revenues will only grow 25 percent. There’s your “structural deficit” right there. The solution is simple: Limit future state spending to match that 25 percent revenue growth, and the deficit problem goes away, without any tax increases.
