O'Malley's second term

Our view: The governor has more hard times ahead — but also the political freedom to tackle Maryland's long-simmering problems

November 07, 2010

Gov. Martin O'Malley won a second term last week, capturing an even larger share of the vote than the one that brought him to office four years ago. There is no doubt that the election was an affirmation of the core of his priorities as the state's chief executive — supporting K-12 and higher education, protecting the environment, expanding health care access and investing in infrastructure projects, including mass transit. But the next four years are going to demand that Mr. O'Malley do more than just hold course. Here are a few areas he needs to focus on:

•Economic development/jobs: Overall, Mr. O'Malley had the right idea during the campaign to address economic development and job growth as a global issue involving Maryland's education system, infrastructure and quality of life. Republican former Gov. Robert L. Ehrlich Jr. focused on small-bore issues of regulation and taxes — not the sort of things that will determine whether Maryland becomes the Silicon Valley of the biotech industry. Even so, the governor would do well to pay attention to the protests from small-business owners who fueled Mr. Ehrlich campaign.

If state labor regulators really are forcing businesses to pay unemployment benefits for people who don't deserve them, he should stop it. If environmental regulators are giving conflicting advice or dragging their heels on making decisions, he should fix it. Mr. Ehrlich's metaphor that he wanted state regulators to be "partners" instead of "sheriffs" may have gone too far, but Mr. O'Malley has a responsibility to make sure they're being fair and reasonable.

Now that politics are out of the equation, Mr. O'Malley should start mending fences with those in the business community who supported his opponent. They have an incentive to work with him — after all, he's going to be governor whether they like it or not — and he has nothing to lose by trying to find out whether legitimate barriers to private job growth exist.

Beyond that, Mr. O'Malley needs to make Maryland's long-term economic growth the centerpiece of his second term. Realistically, his actions won't have much impact on whether the state grows jobs in the next four years — witness the lackluster response to the tax credit he created for businesses that hire the unemployed — but he can lay out a framework through which all decisions point to growing Maryland's competitive advantages in the knowledge economy for generations to come.

•State budget: The common refrain of Mr. O'Malley's critics is that he was just trying to get through this election before unleashing another massive tax increase. He needs to prove them wrong by doing what he hasn't so far: producing a realistic road map for how Maryland is going to eliminate the persistent gap between its projected revenues and expenditures at a time when the economy isn't growing very fast and federal aid is drying up. (This year's budget included a placeholder for federal aid Mr. O'Malley assumed would be coming. With Democrats in charge of both houses of Congress, it almost didn't materialize; with Republicans in charge of the House of Representatives, it won't.)

Mr. O'Malley has made it through so far with fund transfers, one-time cuts, employee furloughs — and a few permanent changes to state spending. It's time to assume that lackluster tax revenue growth is the new normal. Republicans in the legislature proffered plans for righting the fiscal ship without tax increases, and they included some good ideas. He should start there and develop a blueprint of his own. Actually, he should have done that before the election, but with few specifics from the Ehrlich campaign, he faced little pressure to do so.

A key component to his plan should be grappling with the state's $30 billion-plus in unfunded obligations for state worker pensions and retirement health benefits. Mr. O'Malley has said he's waiting for a commission to report on the matter, but he needs to make this a top priority. Mr. O'Malley has come through for state worker unions on issues that are important to them, and that gives him the credibility with their leadership to ask for real concessions on employee benefits and contributions to the system. The unions have to realize that public anger over their retirement benefits is growing, and it's in their best interests to cut a deal now to release some of that pressure. Virtually all states are facing the same problem, and Mr. O'Malley could cement a national reputation if he's able to amicably broker a deal that protects taxpayers in the long run.

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