Red Ink

Anger at actions by Baltimore's mayors has taken various forms over the years, but rarely has it manifested itself in a music video. But on Feb. 11, the day Mayor Stephanie Rawlings-Blake was to give her State of the City address and outline some of her ideas for coping with the dire fiscal forecast consultants predicted for the city over the next decade, the Baltimore City Paper posted on its website a full-length parody of the Police classic "Roxanne,"...

Anger at actions by Baltimore's mayors has taken various forms over the years, but rarely has it manifested itself in a music video. But on Feb. 11, the day Mayor Stephanie Rawlings-Blake was to give her State of the City address and outline some of her ideas for coping with the dire fiscal forecast consultants predicted for the city over the next decade, the Baltimore City Paper posted on its website a full-length parody of the Police classic "Roxanne,"...

A raffle of a $1.6 million house in Baltimore County sounded good to some people - enough to sell 12,000 tickets at $100 a pop. But organizers needed about 20,000 ticket sales to make it worthwhile, and they were hoping for 35,000. So: no raffle. Reader Steve Scarborough told me he got a refund for the two tickets he bought, but "they kept $5.96 per ticket." "I suppose that could add up to a tidy profit for them even if they only sold half of the 35,000 tickets," he wrote in an e-mail.

First Mariner Bancorp's bleeding increased during the second quarter as continued write-downs of real estate and bad loans left the Baltimore company with $11 million in losses. The 1st Mariner Bank parent, locked in a battle for survival, said Friday that its loss during April through June was more than double that of a year earlier. But the almost $4.7 million loss during the second quarter of 2010 would have been higher if not for a $3.8 million tax benefit during that period, the company said.

Blame it on the persistent recession, if you wish. Or the efforts of state political leaders to make a bleak situation look tolerable. Either way, there's no denying that Maryland's budget woes are still here -- already some $70 million in debt as the new fiscal year got under way July 1, with projections of a $240 million shortfall by the time the books close in late June next year.The cause of this latest flow of red ink is the state's creaking economy, still reeling from the onslaught of corporate layoffs during the recession.

And you thought Maryland had problems with its $250 million budget deficit. Look at California's woes: an $11 billion flow of red ink as the fiscal year began July 1. That's equal to the entire gross national product of Ecuador or Tunisia.This huge deficit follows a $14 billion budget gap last year that was never really closed. It's so bad the state is handing out IOUs to workers and vendors. They haven't done that in the Golden State since the Depression.The situation in California is bleak.

Bad news continues to dog Maryland's fiscal leaders. Now the state's current-year deficit is pegged at somewhere between $395 million and $450 million. That's on top of next year's predicted shortfall of nearly $800 million. Yet there still is no agreement on how to close this $1.25 billion budget gap, or when.It will take a combination of drastic program cuts, layoffs and higher taxes to put Maryland's state budget back in balance. The longer legislative leaders wait before acting, the higher the deficit -- and the shorter the fiscal time-frame to make meaningful spending cuts or tax changes.

THE CLOSE of a president's term provides an ideal time to review his fiscal legacy and to compare it with his predecessor's. Let's ask which president, Bill Clinton or George W. Bush, left the nation's fiscal house in better order. When President Bush took office, the federal government had just run a budget surplus for 2000 of more than $236 billion. In the eight years of the Clinton administration, the burden of the national debt on the average American family of four had fallen by $9,200, measured in constant 2003 dollars.

After five years of strong earnings growth, First Maryland Bancorp profits plunged 40 percent, to $44 million, in 1990, but its overseas parent, Allied Irish, is quite likely viewing the results with more relief than consternation.For First Maryland has remained solidly profitable, extremely well capitalized and in a position to prudently expand -- to use a bankerly phrase -- at a time when other affiliates of European banks have been battered and are more likely to shrink than enlarge. Deposits are now flooding in, providing a relatively cheap and stable source of funds, at the same time that capital constraints on other banks have provided what First Maryland Chief Executive Officer Charles Cole sees as openings for business.

Maryland is sinking further into red ink as new calculations place the state's budget deficit as high as $270 million. Officials blame a faltering economy for the growing deficit, which less than a month ago was estimated to be about $150 million."

A raffle of a $1.6 million house in Baltimore County sounded good to some people - enough to sell 12,000 tickets at $100 a pop. But organizers needed about 20,000 ticket sales to make it worthwhile, and they were hoping for 35,000. So: no raffle. Reader Steve Scarborough told me he got a refund for the two tickets he bought, but "they kept $5.96 per ticket." "I suppose that could add up to a tidy profit for them even if they only sold half of the 35,000 tickets," he wrote in an e-mail.

In an era of History Channel TV and gushers of new books, documentaries and movies on historical subjects, you'd think business would be booming at the Maryland Historical Society. Yet when the state's oldest cultural institution announced last month that it was cutting staff, programs and hours of operation for the second time in three years to cope with a $617,000 budget deficit, one didn't have to look far for the reason. The society's current exhibition, a reasonably in-depth exploration of Marylanders' participation in World War II and its impact on subsequent state history, deals with a perennially popular subject that one might expect to draw crowds of visitors.

The moment of horror that hit Baltimore this year, when officials realized the depth of the city's pension problems, came a full seven years ago for San Diego. During a 2002 City Council meeting in that Southern California city, a pension board member announced that the city's plan needed more than $1 billion in taxpayer money to stay afloat. "My heart went down to my toes," recalled April Boling, a certified public accountant in the audience who immediately understood that the retirement system was poised to bankrupt the city.

Maryland lawmakers plan to wrap up work Monday on a $14 billion budget after months of agonizing over how to plug an enormous shortfall caused by deteriorating revenues and mandated spending growth. But all that effort still won't put the state on solid, long-term financial footing. Even with the influx of federal stimulus money, the General Assembly will reconvene in nine months facing a budget gap that analysts expect will reach more than $1 billion. And, some would argue, it might be the worst possible time for Gov. Martin O'Malley and lawmakers to make unpopular cuts that could include layoffs or curtailing services.

Sea of red ink unfair to future generations Nothing breeds more contempt and cynicism toward our government than politicians misrepresenting their policies and spending programs. A case in point is the current "stimulus" bill pending before Congress ("House OKs stimulus bill," Jan. 30). President Barack Obama and Democratic leaders in Congress maintain that the $825 billion (and ever-growing) "stimulus" bill is needed to help energize our troubled economy and create jobs. At the same time, Gov. Martin O'Malley and Maryland Democratic legislative leaders are telling us they are holding off on necessary spending cuts caused by our own deficit because Maryland is in line to receive $3.5 billion as its share of this stimulus package ("Budget cuts held as state awaits stimulus," Jan. 27)

DETROIT - General Motors Corp. reported a stunning second-quarter loss of $15.5 billion yesterday because of a deep decline in United States sales and charges for job cuts, plant closings and the falling value of trucks and sport utility vehicles. GM, the largest American automaker, said it lost $6.3 billion on operations in the quarter that ended June 30, and its worldwide revenue fell 18 percent. But the company's overall loss was inflated by $9.1 billion in special charges that included $3.3 billion for buyouts of hourly workers and $2.8 billion related to the bankruptcy filing of its former parts unit, the Delphi Corp.

In the race to the bottom, General Motors Corp. has been losing $3.6 million a day this year while rival Ford Motor Co. has daily bled $14.4 million in red ink. Ford Chairman and Chief Executive Officer William Clay Ford Jr., who has argued against placing his company in the same boat with beleaguered GM, lost those bragging rights yesterday. Ford's first-quarter loss of $1.2 billion was nearly four times greater than the $323 million loss posted by GM on Thursday. Ford attributed its latest loss to a hefty $2.5 billion charge for its extensive restructuring plan.

The chief executive of Vertis Communications, a Baltimore advertising and marketing company, assured analysts yesterday that its turnaround initiatives are showing progress after reporting that its second-quarter loss nearly quadrupled and revenue declined. In a news release late Thursday, Vertis said it lost $19.7 million in the three months that ended June 30. That compared with a loss of $5 million in the second quarter last year. Vertis, a privately held company, announced financial results because its debt is publicly traded.

They crowded into a room at the Chesapeake Innovation Center one day last fall for cocktails and finger food, and more importantly, introductions. A sprinkling of entrepreneurs worked the room of venture capitalists, attorneys and high-ranking officials from the National Security Agency, Boeing Co. and Northrop Grumman Corp. As they chatted, it was hard to figure out who was more impressed with meeting the other. That's the way the Chesapeake Innovation Center, the nation's first homeland security incubator, is supposed to work.