Maryland's Budget Blunder

January 08, 1992

As legislators descend on the State House today to begin their 90-day session, they might take a moment to reflect on how they got into the mess they now face: 20,000 protesters marching on the government complex at noon and legislators still torn between raising taxes and cutting a whopping $1.2 billion from existing programs.

Maryland was late in recognizing the severity of the economic recession that created the present predicament. It was late in reacting to clear signs of gaping revenue shortfalls amid rising demands for public help. When the state did act, the response was so abrupt that local governments still are scrambling to make adjustments without eviscerating services to citizens. And now, state legislators can't agree on what to do about the continuing shortage of funds.

One reason for the state's difficulties is the annual budgeting process, which encourages stopgap solutions and overly optimistic revenue forecasts. In neighboring Virginia, by contrast, a two-year budgeting procedure dictates more conservative forecasting and long-range adjustments in programs to adapt to adverse economic changes.

Virginia, too, was staggered by the recession. Yet rather than take the Maryland approach -- simply hoping that things would improve -- Old Dominion officials acted decisively, promptly closing a $2.2 billion gap through program cuts and fund transfers without disrupting services. The state's two-year budget enabled legislators in Richmond to deal more aggressively with the revenue shortfall and enabled government officials to reduce spending gradually instead of all at once.

Taking a longer perspective on budgeting and revenue forecasting paid big dividends in Virginia. Maryland officials ought to learn from their own painful experience. A two-year budget is a change well worth considering in the Annapolis State House this session.

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