Sunday, December 21, 2008

New Report: Maryland Budget Situation "Devastating"

The Maryland Budget and Tax Policy Institute just issued a new report on the state budget. Its conclusions are as dark as can be imagined.

The main points of the report are:

1. Economic growth in the state "has all but ground to a halt and has perhaps now reversed." Consumer spending, the housing market and the retail sector may not have hit bottom and job losses are likely.

2. The state budget deficit now stands at $391 million for the current fiscal year (which ends on 6/30/09) and $1.87 billion for the next fiscal year.

3. The state's Spending Affordability Committee's recommended increase of 0.7% is the lowest hike in its 25-year history and would fall well short of inflation. The committee recommended reducing the state workforce by 1,000 positions. Currently, there are 3,300 vacant positions not including legislative and higher education employees.

4. The employee furloughs recommended by the Governor will only contribute less than 9% of the amount needed to balance the state budget.

5. The authors write:

The spending cuts needed to address budget gaps of this size would lead to a catastrophic threat to state programs and Maryland's most vulnerable families and citizens... An all-cut solution to the budget may not be practical. It's time to re-open revenue options as part of a comprehensive budget solution.
This last bit of advice is unlikely to be heeded. The vast majority of the state politicians I talk to agree with Senator Nancy King (D-39), a member of the Senate's Budget and Taxation Committee, who recently told the Gazette, "There is absolutely no interest in any taxes at all."

That sentiment will prevent the state from doing anything about its Crisis in Transportation. And now we will see its impact on education, health care and public safety, which together account for 83% of the state's budget. We are about to find out what "devastating" really means.