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A First Look At Maryland's Proposed FY 2011 Budget

Economic & Fiscal Policy

by Gabriel J. Michael

MARYLAND POLICY REPORT

Each New Year brings another legislative session, and with it, another budget proposal. Prospects for recovery from this recession are good, but slow. While Maryland's unemployment rate is lower than the national average, analysts believe the state cannot expect full recovery until 2012 at the earliest.[1] Yet the economic toll of the past year only reinforces the importance of ensuring that the state of Maryland is fiscally responsible, promoting tax policies that will encourage economic growth while cutting costs and increasing the efficiency of services.

Unfortunately, the O'Malley administration's proposed budget accomplishes none of these things. For the fifth year in a row, Maryland faces a massive and ever-increasing structural deficit, estimated to be $2.5 billion in FY 2011.[2] Maryland simply does not generate enough tax revenue each year to meet its expenses. Indeed, in the past two years, tax revenues have actually declined as a result of the recession, and while they are expected to increase in the coming year, they will still not have caught up to pre-recession levels. Meanwhile, spending has increased almost without fail.

[1] Jay Hancock, "Rise in temp workers a sure, if slow, sign of recovery," The Baltimore Sun, February 10, 2010, http://articles.baltimoresun.com/2010-02-10/business/bal-bz.hancock10feb10_1_temp-agencies-economy-recovery; Aaron Davis, "O'Malley puts 'economic recovery' ahead of tax increases," The Washington Post, January 22, 2010, http://www.washingtonpost.com/wp-dyn/content/article/2010/01/21/AR2010012104724.html.

[2] Department of Legislative Services, Fiscal Briefing, January 2010, p. 26, http://mlis.state.md.us/2010rs/budget_docs/all/Operating/Fiscal_Briefing.pdf.

To read the full report, click here