Managing The Pain

Our View: Gov. O'malley Is Right To Seek Budget Cuts That Won't Hamper The State's Economic Recovery

So Far, He's Made Some Good Decisions And Some Bad Ones

July 22, 2009

Here's the good news: Gov. Martin O'Malley, after seemingly endless rounds of budget cutting, has still managed to find something we won't miss - $5.5 million in Lottery advertising.

Here's the bad news: The rest of the $280 million in cuts Mr. O'Malley unveiled Tuesday afternoon aren't so painless, and they're only an appetizer for even worse reductions to come. The governor anticipates bringing about $420 million more in cuts to the Board of Public Works before Labor Day, and those, he hinted strongly, are going to come by reducing the state payroll and aid to local governments. What's more, only $148 million of the cuts he announced Tuesday represent ongoing savings, meaning the rest won't help solve the even bigger budget problems that loom next year, when expenses are projected to outpace revenues by $1.5 billion or more.

Mr. O'Malley's foes will no doubt try to blame the state's financial woes on him - they'd probably pin the entire global financial meltdown on him if they could - but in truth, Maryland's troubles are no worse than those in other states. Hard though it may be to believe, our economy remains stronger and our state budget problems less severe than many others'.

The question is how well Mr. O'Malley handles the situation. The standard he has set for himself, and it's a good one, is to manage the cuts in such a way that Maryland will be poised to recover more quickly from the recession than its peers. On that score, he makes some good decisions and some bad ones.

At a news conference Tuesday, Mr. O'Malley repeatedly vowed to protect the state's investment in education, which he said would be the key to Maryland's future economic competitiveness. But when he talks about education, Mr. O'Malley means K-12 education and maintaining the huge ramp-up in spending Maryland has made in that area in the last several years. Indeed, as the state's standardized test scores for elementary and middle schools attested when they were released Tuesday, all those billions seem to be having an effect, especially in Baltimore City.

A great K-12 education system is essential both to provide opportunities for children and to make the state an attractive place for people to live and raise families. But it doesn't even get you to first base when it comes to competing in the global economy. For that, you need excellence in higher education as well, both at the university and community college levels.

Yet, Mr. O'Malley announced plans to cut funding for the University System of Maryland by some $37 million. That wouldn't necessarily be a problem except for his continued insistence that the system maintain, for a fourth year in a row, a freeze on undergraduate tuition. A modest tuition increase would allow the system to augment need-based financial aid and accommodate the growing demand for higher education. But as it is, quality higher education will be unavailable to some students not because they can't afford the tuition but because the system can't afford to provide them with seats in the classroom.

When it comes to the immediate recovery from the recession, community colleges may be even more important because of their role in retraining workers. So far, Mr. O'Malley has avoided significant cuts to them, but that could change as he works in the coming weeks to cut aid to local governments. The state provides some $280 million in funding for community colleges, and reductions could hinder Maryland's economic recovery if they make tuition unaffordable, reduce support for students or hinder the colleges' ability to adapt their programs to the changing needs of the economy.

Another problem that could hamper Maryland's recovery would be continued budget shortfalls at the state level. The last thing Maryland would need at the beginning of an upturn would be tax increases. Mr. O'Malley says he is determined to avoid them, and there appears to be no appetite in the General Assembly to raise taxes again. But if the state does not find significant ongoing savings, it could be in trouble. Maryland balanced its budget this year in part by using federal stimulus money to prop up its education spending and funding of teacher pensions, among other things. That cash runs out in two years. Tempting as it might be to put off worrying about that until after the 2010 election, when more cuts - and maybe even more tax increases - might seem politically palatable to our elected officials, the state will be stronger in the long run if it plans for the sunset of those funds now.

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