Let's cut both

Our view: The House of Delegates wants to end legislative scholarships, but the Senate is targeting bond bills

chances are they’ll do neither

April 05, 2010

The biggest item on the to-do list for the Maryland General Assembly in its final week is deciding on cuts to Gov. Martin O'Malley's budget proposal, and there are relatively few differences between the plans approved by the Senate and the House of Delegates. Each would shave about $125 million from the governor's $32 billion plan, significantly less than the $660 million the legislature cut last year or the $441 million it cut the year before. Whatever decisions the House and Senate make, this year's budget will be noteworthy as the first in recent history to be smaller than the budget from the previous year.

The immediate need for reducing spending is less dire than it has been in recent years because state tax revenues appear to have stabilized. The Board of Revenue Estimates' most recent report found no reason to lower expectations for the coming fiscal year, and the way things have been going, that's good news. It means that the legislature has less call to try to bulk up Maryland's reserve funds to provide a greater cushion. The budget Gov. Martin O'Malley submitted was balanced based on the state's best guesses about its future tax collections as of January — as is required by law — and the economic conditions don't give as much reason to worry that it will fall out of balance as has been the case in previous years.

The question now is whether the General Assembly will take steps to shore up Maryland's long-term fiscal structure. Even with a reasonable rate of economic growth, projected mandatory spending increases for items such as health care, education and employee pensions far outstrip expected increases in tax revenue. That's what state leaders mean when they talk about Maryland's "structural deficit." Unlike the federal government, the state is prohibited from piling up debt to pay for its operations. Instead, the issue is whether the state has made promises that it won't be able to keep — and that will one day require even more painful cuts or tax increases.

Prompted at least in part by Republican legislators, the Senate this year took some steps to rein in those long-term obligations. It voted to gradually shift some of the burden of teacher pensions to local governments, and it decided to maintain cuts to the program that provides local governments with transportation funds. The net effect is to cut the projected $2 billion spending imbalance in Maryland's fiscal 2015 budget roughly in half.

The House of Delegates rejected that plan, with lawmakers saying they need more time to study the teacher pension issue. That's hard to believe; moving some responsibility for teacher pensions to local governments has been talked about for years in Annapolis, and there's good logic behind it. Local governments effectively determine the size of the pensions when they set teacher salaries, but they currently don't have to consider those costs because someone else is picking up the tab. Additionally, the current system benefits the richest counties most and the poorest counties least.

When a dispute like this one rolls into the final week of the legislative session, the smart money is on the status quo, which means the House is likely to prevail, and the efforts approved this year to control long-term spending will be modest. That's a shame; the sooner Maryland starts making decisions about how to tackle the structural deficit, the less severe those actions will have to be.

The House did, however, make one long-overdue cut to the budget when it chose to eliminate a $11.5 million program that allows legislators to dole out college scholarships to whomever they choose. It would be easy to caricature the program as prone to abuse, as in cases when legislators have steered scholarships to the children of campaign supporters and contributors, but that's not exactly fair. Sometimes the scholarships have gone to lawmakers' relatives, too. But senators, who each have three times as much to give out as delegates, are more invested in the program, and they have resisted previous efforts to kill it.

Immediately after the House voted on the scholarships, the Senate decided to eliminate future funding for the state's so-called bond bill program, the Annapolis version of earmark spending in which legislators have funded plenty of worthwhile projects but have also been known to steer cash to organizations to which they have personal or family connections. That program tends to be popular in the House.

In this game of legislative chicken, expect both chambers to flinch. Speeches will be made on both sides pointing out the good that can be done through legislative scholarships and local bond projects, and chances are, both ideas will be dropped. But just maybe, in an election year when the currents are running against anything that smells like political aggrandizement at taxpayer expense, the two chambers can agree to just cut both. It wouldn't make much difference to Maryland's long-term budget picture, but it would be a strong symbolic gesture.

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