Budget bobble

Our view: The only thing worse than the state budget adopted by the Maryland General Assembly would be just about all the alternatives

April 14, 2009

The $13.8 billion state operating budget enacted Tuesday by the General Assembly is not a pretty thing. Shortchanged local governments can't be happy with it. Same with state employees who are going without steps or merit pay and agency heads who must do more with less. But it could have been far worse, and given the economic realities of the times, it's probably about right.

Let that stand as no more than a qualified endorsement. Had President Barack Obama and Congress not provided $2.5 billion in stimulus money this year, the outcome would have been disastrous. But thanks to those funds, lawmakers can brag about how they passed a budget that largely preserved public education spending, will likely allow the state's public universities to maintain a freeze on in-state student tuition, and does not harm the Medicaid program.

These three accomplishments are noteworthy because together, K-12 and higher education and health care to the poor represent the majority of state spending. The other significant outcome is that balancing next year's budget did not require shortchanging the so-called Rainy Day Fund, so state government will enter fiscal 2010 this summer with a surplus of more than $700 million.

That doesn't leave Maryland in an enviable financial position, however. In the long term, Gov. Martin O'Malley and the legislature are maintaining a level of spending that is not sustainable unless the economy reverses course. Next year, when legislators return to craft a 2011 budget, they may be facing a $1 billion deficit. And given all the easy fixes they've already taken (transfers of fund balances or tapping local aid among the more egregious examples), closing such a gap could prove a tall order indeed.

Conservative voices in Annapolis say spending less would have been the more prudent course, and they may yet be proven correct. But to reduce the state budget much further right now based on two-year revenue projections - given the detrimental impact such an action would invariably have on schools, and the likely hardships imposed on our most vulnerable citizens - is anything but prudent.

The fact is, no one knows what the economy will be doing in three months, let alone 15 months, when fiscal 2011 will just be starting - or especially 27 months from now, when it will be wrapping up. If circumstances worsen between now and January, Mr. O'Malley and his fellow members of the Board of Public Works can take corrective action by cutting spending.

Ultimately, every budget is a compromise. We aren't thrilled by some of the choices. But let's also keep perspective. Maryland government has so far steered through the recession more successfully than most of its peers and with its triple-A bond rating intact. The only real and lasting relief will come when the nation's economy truly rebounds.

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