Maryland lawmakers are fresh out of accounting tricks as they prepare to tackle a $1.6 billion budget gap, after years of borrowing and funding transfers have helped the state fare better than others through the recession.
Federal stimulus money has dried up, the state’s rainy day funds need an immediate $30 million infusion, and debt has more than doubled since 2000 as lawmakers have used bonds to help plug annual budget gaps, according to Maryland’s chief budget analysts.
The state used more than one-third of its borrowing capacity — roughly $414 million in bonds slated for capital projects — to help fill a gap in the operating budget for the current fiscal year. One-quarter of the borrowed money allowed for one-time transfers of funding between accounts.
In the meantime, falling revenues have pushed the state to its debt limit, and lawmakers have already financed 75 percent of available bonds for fiscal 2012 — leaving state agencies to fight over the remaining $239 million for needs costing nearly $700 million.
“This is the impact that all of this shifting has had,” state budget analyst Matt Klein told lawmakers at a fiscal briefing.
Maryland’s Republican caucus has criticized Gov. Martin O’Malley for relying on accounting maneuvers to help balance the budget.
“We have a state on the verge of bankruptcy,” said House of Delegates Minority Leader Anthony O’Donnell, R-Calvert and St. Mary’s counties. “Eventually there’s only so many pots of money to raid and the stimulus money is gone. At the end, pretty soon, you gotta pay the piper.”
He said he fears Democrats will lobby for tax increases, with their accounting moves crippled by the debt limit.
Senate President Thomas V. Mike Miller Jr., D-Calvert and Prince George’s counties, said taxes will be a tough sell this year, but “at some point in time we’re going to have to pass a gasoline tax.”
Maryland’s 23.5-cents-per-gallon gas tax is lower than those of 27 other states — including neighboring Pennsylvania and West Virginia. The revenue would return dollars to the state’s Transportation Trust Fund, which O’Malley has raided in the past as a source of funding transfers.
On top of fixing the 2012 budget, the legislature is expected to tackle ballooning pension and health benefits costs — which are $33 billion underfunded.
“We might not end session on time,” Miller said, predicting certain gridlock after studying his colleagues’ faces during the two-hour budget briefing. “The fact that we’re into an extra session will put added pressure on us to do what’s right for our constituents and make the tough cuts.”
The next legislative session begins in January.
