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Editorial: Wanted: Budget leadership

Originally published in the Baltimore Examiner

Economic & Fiscal Policy

MPPI IN THE NEWS

DECEMBER 21, 2006 Bookmark and Share

Editorial: Wanted: Budget leadership
The Baltimore Examiner Newspaper, The Examiner
Dec 21, 2006
BALTIMORE - Gov.-elect Martin O’Malley said earlier this week that the state is “spending at a much quicker rate than we can afford.”

This is before considering programs, including increasing spending for education, the environment, health care and transportation, proposed by O’Malley.

When the rest of us come up against that problem, only one solution exists: cutting spending.

That must also be the solution for Maryland.

Borrowing money should not be an option. The Maryland Department of Legislative Services earlier this month released a report advising against increasing the state’s debt to pay for operations. The reason? “Because the State is close to the limit, a sudden change in personal income can push debt outstanding close to or over the limit.”

Too much debt can drive the state’s credit rating down — just as would happen or does happen to the rest of us, making it more expensive to borrow money — again, just like it is for the rest of us with lower ratings. The difference is that when one of our credit ratings goes down, it doesn’t cost all of our fellow taxpayers.

And raising taxes is never a good idea — especially when it’s to pay for spending that has not proven to benefit citizens. For example, Maryland’s spending on education — one- third of the general fund — has risen 59 percent since 2002. That is the highest growth rate in the nation. Have the state’s children performed at the same pace? Even close?

According to the Maryland Public Policy Institute’s recently released “Guide to the Issues,” “Left unchecked, aid to local education will consume 36 percent of the general fund budget by 2011, crowding out other spending priorities.” Similarly, MPPI estimates the state will spend nearly 20 percent of its budget on medical assistance by 2011, up from 15 percent in 2006.

With spending anticipated to grow 41 percent and revenues 25 percent from 2006 to 2011, deficits loom. Gov. O’Malley and state legislators must show leadership by prioritizing spending, cutting waste and enacting structural reforms that promote fiscal responsibility.

Among MPPI’s suggestions for the state to tame the deficit are:

» Assess whether increased school spending equals better student performance;

» Stop subsidizing money-losing projects, including the Rocky Gap Golf Course and Conference Center and the Baltimore City Convention Center;

» Reform Medicaid to “emphasize preventative care, expand the role of private insurers and encourage patients to take more personal responsibility for their health care decisions;” and

» Adopt procedures that make it difficult to overspend, including creating five-year discretionary spending caps.

These ideas make sense. Implementing them will not be easy, but it would show real stewardship of taxpayer money on the part of Gov. O’Malley and the 2007 legislature.

It could happen, right?

Examiner