Budgetary caution

January 17, 2008

True to his word, Gov. Martin O'Malley yesterday unveiled his plan to keep a lid on overall state spending next year. Even his Republican critics will have to concede that while he may have recently raised taxes, he's not exactly a big spender, at least not in fiscal 2009.

Not only does Mr. O'Malley's proposed $31.5 billion budget fall well within the state's long-standing affordability guidelines, but it also reflects the smallest year-to-year increase in five years. And it does so by broadly reducing the growth of spending, including eliminating tens of millions of dollars in Thornton aid that was due to local school systems in the coming year.

The 4 percent budget increase reflects the unpleasant reality of last year's tax increases - most of it was needed just to keep vital services such as education, transportation, health and public safety at existing levels, not to expand them.

Such a prudent approach is more than justified given the economic uncertainties of the moment. The budget doesn't call for layoffs (the 500 jobs trimmed are currently vacant), but it does mean that even some of the governor's top priorities are more or less staying pat.

Where does the money go? Here are two decisions that would seem to reflect the governor's thinking. He boosts the state's surplus accounts by more than $300 million and doubles from $105 million to $210 million the money set aside for future state employee retiree health care.

In effect, the governor wants to put more in the state's savings account. That's not the thing that ordinarily helps a politician win re-election, but it's exactly what the accountant ordered - a heavy dose of pragmatism and planning for the future.

And here's another sign of change in Annapolis: Mr. O'Malley wants to spend about $30 million more on the Department of Juvenile Services, an agency that has promised reform but never had the funds to do it. Under the circumstances (particularly given the required cuts to public schools and other far more politically popular programs), that's extraordinary.

We can't say that everything in the budget is entirely to our liking. Maryland private colleges and universities, for instance, will see no increase in funding. Community colleges are getting more, but not as much as they need to keep up with their expanding enrollments, and certainly far less than their K-12 peers have received in recent years. Nor does the plan assume the recently enacted tax on computer services will be rolled back - as we'd eventually like to see.

But overall, Mr. O'Malley's cautious proposal is on the right track. Local governments would be advised to follow suit. Now is the time to tighten belts and pay off the proverbial credit cards (such as the government's underfunded retiree benefits) to prepare for the potentially bumpy ride ahead.

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