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The Appearance of Fiscal Prudence

by Eileen Norcross and Benjamin J. Vanmetre

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In 2010, after grappling with a decade of structural deficits and two years of recession, Maryland's Spending Affordability Committee (SAC) questioned its 30-year record on limiting state spending:

Recent years have sorely tested the budgetary concepts customarily employed to account for spending for spending affordability purposes. The combination of huge mid-year spending reductions, massive federal assistance and extensive reliance on one-time supports makes it impossible to clearly establish a basis for calculating a limit without arbitrary judgments about what should be in or out.

The new approach called for by the SAC charges the General Assembly and Governor with the task of reducing the state’s structural deficit.

The call for spending discipline by the SAC, a committee created to recommend prudent spending limits to Maryland’s Legislature and Governor, highlights the design flaws and erratic application of Maryland’s three decades-long SAC experiment. Maryland’s unsuccessful approach to limiting spending can be evaluated against the experience of other states with tax and expenditure limits. The SAC process is subjective, subject to gaming, and ties spending growth to anticipated revenue growth, functioning more as a spending target rather than a cap.

The SAC should be abolished and replaced with a clear, transparent, and easy to evaluate spending rule to guide the General Assembly’s and Governor’s budget deliberations.

 

To read the full report: Download file The Appearance of Fiscal Prudence


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