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January 5, 2011

The Fall of The House O’Malley Built?

Kevin E. Dayhoff

Now that the hangover from last November’s Maryland General Election is becoming a memory, and Marylanders have begun to put away the Christmas lights and joined a local gym to shed those holiday pounds, many are beginning to set their sights on January 12, the beginning of the 2011 session of the Maryland General Assembly.


As it has for (too) many years, the focus of attention by legislators, political junkies, local government leaders and the average family huddled in fear at the kitchen table, is what will be done with Maryland’s perennial structural deficit.


Those with short – politically expedient – memories would have you believe that Maryland’s budget shortfall of the last several years is the result of a protracted downturn in the economy that has persisted across the nation since 2007.


Certainly the recent recession has taken its toll on the state’s pocketbook; however, those of us old enough to remember can recall that the tired conversation over the Maryland state budget has been around since the mid-to-late 1990s, if not before.


Much of the state’s budget problems have persisted over the years, not because of a revenue problem, but an addiction to spending that Maryland simply has not been able to shake, no matter how dire the warnings or consequences.


Unfortunately, the budget gimmicks, funds transfers, and sleight of hand approaches that have been glossed over by a sympathetic press have taken quite a toll. At this point, getting out of this mess will take fiscal discipline and planning that has escaped the state’s leadership for decades.


Taxpayers may be reminded, at a time like this, that repeating the same plea for fiscal discipline from our state’s elected leadership over and over again, and expecting a different result is a definition of delusional psychosis.


However, a recent “bad” combination of a dire report by the state’s Spending Affordability Committee on December 21, 2010, coupled with the release of the Report of the Maryland Board of Revenue Estimates on Estimated Maryland Revenues, submitted to Maryland Gov. Martin O’Malley on December 15, 2010, along with an equally foreboding Public Employees’ and Retirees’ Benefit Sustainability Commission set of recommendations on December 20, 2010; may – just may – sober up our state’s leadership to realize that something must be done now – beginning with this session of the General Assembly.


Whether or not the recent November election will empower Maryland’s elected leadership to act now is subject to speculation. On the one hand, the fact that both Maryland’s executive and legislative branches were held harmless by the re-election of most incumbents could work for us – or against us.


Having been returned to office, coupled with the dire financial straits of the state’s pocketbook, could possibly allow the state’s legislative and executive branch to make the painful decisions necessary to put the Maryland financial house in order – without considerable fear of repercussions from the citizens of Maryland.


Not to be overlooked is the fiscal dynamic that the conservative tsunami which swept aside our nation’s great two-year experiment in ultra-liberal fiscal approaches, the new Congressional leadership in Washington will probably not extend any additional federal stimulus aid to states such as Maryland.


The Spending Affordability Committee’s report indicates on page 29 that the current budgetary shortfall is $1.633 billion and the structural deficit looms at $2.103 billion.


This, in spite of the draconian increases in taxes boldly set into motion by the special legislative session that Governor O’Malley shepherded through in the fall of 2007.


If bold and difficult decisions need to be made, the conventional political wisdom is for the current administration to make them as early as possible in hopes that the Maryland electorate, aided by a sycophant press, will totally forget about it before the next election.


That strategy certainly worked like a charm last November.


Riding a wave of public backlash against public sector employees and unions, as has – surprisingly – been recently reported by The New York Times, “Public Workers Facing Outrage as Budget Crises Grow,” January 1, 2011, and “Strained States Turning to Laws to Curb Labor Unions,” January 3, 2011. Look for the governor’s office and the General Assembly to take a hard look at spiraling pension and public employee benefit costs.


Actually, as we learned from last November, Maryland’s unions and state teachers will support the state’s elected leadership no matter what they do; so they might as well do whatever is necessary to take the proper steps for meaningful financial reform.


The flip side of the coin is not good news for anyone living anywhere in the state outside of Montgomery, Prince Georges, Howard, and Baltimore City. The voting bloc within those jurisdictions is the only thing that matters to Maryland’s political elite.


The good news and the bad news is that this session of the General Assembly is facing the perfect storm if the state’s financial house is not put in order by significantly cutting spending.


People who rant and rave about how raising taxes and increasing entitlement programs drives jobs and businesses out of the state are delusional and wasting their breath.


Just as the state has systematically destroyed the horse racing industry in Maryland, the state’s political elite simply does not care about the business of agriculture or small businesses in the state, because agriculture and small businesses cannot cause the powers-in-charge to suffer any consequence for their behavior.


As long as the nation’s capital is located in Washington, Maryland’s leadership is free to raise taxes on alcohol and gasoline and shift a large portion of the state teacher’s pension burden back on to the counties and therefore, cause local governments to have to raise property taxes.


As we will soon learn, elections have consequences and those of us who live in the feudal outback, outside of the “One Maryland” polyglot, will be the only ones suffering that consequence.


I’m just saying…



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