While it's still a substantial amount, it's nothing compared with what's going on elsewhere or what would be happening without one of Maryland's biggest-ever tax increases, enacted during the 2007 special legislative session.
Give O'Malley and the legislature credit. The personal income tax increase that year was excessive, but raising the sales tax, corporate income tax and other taxes was critical to avoiding the kind of disaster seen in other states.
Nobody in Annapolis foresaw how bad things would be two years ago. But even in late 2007, it was obvious there was a gaping budget hole. Annapolis accomplished what seems to be beyond so many other legislatures and public executives these days, including the one in Washington: analyzing, deciding and acting.
Yes, one-party rule helps. And before we give the Democrats too much credit, don't forget that the Democratic legislature helped create the budget gap by denying Ehrlich the slot machines they later paved the way for under O'Malley.
More cuts are coming. Federal stimulus money will peter out in a year or two. Chances that the economy will revive enough to make up the difference are practically zero.
Maryland's tax revenue depends heavily on retail spending and personal income, neither of which will revive soon. Adjusting for the recent rate increase, sales-tax collections fell last fiscal year for only the second time in four decades, according to Roose's letter to state officials.
Don't count on slot machines, either. They'll contribute maybe $600 million a year when they get up and going - and who knows when that will be?
Even with the recently approved spending reductions, the long-term annual gap between projected revenue and projected spending is between $1.5 billion and $2 billion a year, says Warren Deschenaux, chief fiscal analyst for the legislature. There's no guarantee the midyear cuts approved last week will get us even up to the end of the fiscal year on June 30 without more misery.
"We could have a shot at it," he says.
Yes, revenue increases are another way to address budget problems. But Maryland has shot its tax-increase bolt. Taking into account the 2007 increases, we now rank No. 4 on the Tax Foundation's list of highest state and local tax burdens. O'Malley should boost tuition at state universities, but beyond that there aren't many revenue rate increases in the cards.
So the pain isn't over. O'Malley has shrunk the state work force by more than 3,000 jobs, but few of the reductions came from layoffs. Up for re-election next year, supported by the unions, he has so far spared state workers the kind of layoffs seen elsewhere.
Comptroller Peter Franchot's idea of a bipartisan commission to plan future spending cuts is still a good idea. But however things work out - and they won't be pretty - Maryland is handling the Great Recession better than most of its peers.
