Accounting tricks

April 13, 2004

THE BEST thing that can be said about the $23.6 billion state budget approved in the final hours of the General Assembly session yesterday is this: It doesn't hurt -- much -- yet.

That's hardly a noteworthy accomplishment, but Gov. Robert L. Ehrlich Jr. and legislative leaders can assemble this morning in the State House and proudly boast that they've come up with a plan that preserves most state programs.

They've paid for it in large part by increasing a wide range of fees and stopgap transfers within the budget.

Unfortunately, the plan also shortchanges Baltimore and the state's 23 counties, but the full effect of that won't be known for months. Local officials call this the "shift and shaft." It's the Annapolis way. By cutting out about $200 million in local aid -- chiefly by reducing the local share of highway user funds (money to build and fix roads) -- a big chunk of the state's fiscal woes has been bequeathed to the next level of government.

Something similar happened last year with the state budget. The result? According to the Maryland Association of Counties, 13 local governments raised taxes, with most raising property taxes. Mr. Ehrlich isn't dumb. Why take the blame for raising taxes statewide when you can let some other group of politicians take the blame for lots of local tax hikes?

But wait, it gets worse. The real failure of this year's budget is its shortsightedness. While the state is now deficit-free for fiscal 2005 (the year that begins July 1), it's at least $830 million in the hole for the following year. And the problem is likely to get much bigger after that.

Mr. Ehrlich felt he could at least soften the brunt of these future deficits with some form of legalized slot machines. Not only was that a bad idea, he knew from the outset that there was a good chance his proposal was doomed to failure. What was his Plan B? It appears the administration never had one -- their position was pro-slots and to oppose any major tax increase. No compromise was ever possible.

That suggests the governor plans to cut his way out of the deficit. And that means a lot more shifting and shafting -- and pressure on local governments to raise taxes, too. In terms of cuts, health care for the poor and aid to education are the two biggest targets on the horizon. If this year's budget was austere, next year's will be downright Dickensian -- much of the balancing could end up hitting low-income residents the hardest. The administration is already openly talking about cutting back the state's share of retirement funds for teachers, a move that could leave Baltimore another $42 million in debt.

But that's at least a year away. Today, the governor and legislators will trumpet their accomplishments. They'll talk about bringing home the bacon -- the capital budget's pork (a new building here, a concert hall there) -- and tout new spending on roads and sewer plant upgrades in their districts.

No reason for voters to get upset, they'll tell us, at least not yet. That's another day -- soon enough.

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