Yes, we have no bananas

November 19, 2006

Budget experts dryly define a structural deficit as a condition in which the amount of planned spending is greater than the amount of projected income. Politicians, on the other hand, view a structural deficit as the gorilla who carried them to the dinner party and who, usually some time between hors d'oeuvres and dessert, has to be fed the bananas it was promised or it will start swinging menacingly from the legislative chandeliers.

While Gov.-elect Martin O'Malley, facing the task of reviewing a budget that could reach $15 billion, will inherit a shortfall of more than $400 million, he'll be able to patch some of the revenue holes with a combination of modest cutting and dipping into the state's surplus "rainy day" fund. That should be enough to keep Wall Street from lowering the state's vital AAA bond rating for at least another year. But such quick fixes aren't the real answer. The legislature must begin sooner rather than later to devise long-term solutions to what is obviously a long-term problem.

When the General Assembly convenes in January, a few lawmakers may voice support for new revenue sources - a penny increase in the sales tax or legalization of slots - but unless income falls well below current forecasts, the talk will serve only to set the tone for the 2008 session. And that's too late.

State budget analysts predict that over the next four fiscal years, Maryland will experience a structural deficit of $5.7 billion, a looming dilemma provoked when income to the state's coffers fails to keep pace with increased spending on mandated government programs. The housing market, which boomed over the past two years and spared the Ehrlich administration and the Democrat-controlled legislature from making painful cuts before an election, has dropped 20 percent. Personal income is static, and the economy may be in store for a stubborn slowdown.

In the meantime, huge increases in spending will be tagged to the Thornton plan, the state's laudable six-year commitment to improving education, as well as to obligations to make up for underfunding public safety, juvenile services, foster care and Medicaid. Because state law prohibits an unbalanced budget, the formula for fixing the money problem is a no-brainer: Cut programs or raise revenue.

Unfortunately, the gnashing of the gorilla's teeth will not likely happen until 2008, when the structural deficit threatens shocking consequences and, conveniently, gives lawmakers enough time to scrounge the bananas well before they return to the campaign trail.

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