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Fake Surplus

Originally Published in the Frederick News-Post

Government Transparency

by Marta Hummel Mossburg

MPPI IN THE NEWS

Recent reports gush that Maryland expects a $195 million budget "surplus" this year. But saying that Maryland will end the year with extra cash is to truth as soda is to health food.

As the left-leaning Maryland Budget and Tax Policy Institute said in "The Regular Person's Guide to the Governor's Fiscal Year 2012 Budget":

"On a 12-month basis, the budget for fiscal year 2012 is still not 'structurally' balanced. Under the Governor's plan, the state will spend (in general funds) $14.6 billion and take in $13.7 billion. This gap of $900 million is made up by spending down the general fund balance, transferring money from Open Space funds, the Bay Restoration Fund and other special accounts, and using bond funds instead of current revenues for capital programs."

So, the $195 million more anticipated from original estimates that the state expects in fiscal 2012 still leaves Maryland in a deficit of $705 million this year.

Unless and until another $705 million in extra money appears in the state treasury -- maybe investor Warren Buffet will take pity on us -- the budget will remain in deficit.

Most likely, however, the money will be spent, exacerbating the widening gap between money in and money out.

The picture is a lot worse than this year would make it seem, however. As the Institute for Truth in Accounting points out, many liabilities are not added to the yearly balance sheet, including pension costs. A 2009 analysis of state finances by IFTA found that, "Almost $40.9 billion of state employees' retirement and other costs have been pushed into the future, and thus onto our children's and grandchildren's backs."

This year the organization pegged liability for Maryland's debt at $16,500 per person -- the ninth worst in the country. Thankfully it has not yet reached levels in Connecticut ($41,200 per person), New Jersey ($34,600 per person) and Illinois ($26,800). But the state is not moving in a direction to fix the problem.

Instead of stopping unsustainable spending, it continues to borrow money from dedicated trust funds and has been doing so for many administrations. For example, as Maryland Public Policy Institute Senior Fellow Gabriel Michael pointed out in a 2010 policy report, the InterCounty Connector (ICC) was supposed to be paid for in cash, but the state broke its promise and issued bond debt instead.

Read the budget to find out what other money is being confiscated from allegedly sacrosanct "trust funds" into the general fund. The practice not only jeopardizes important transportation and other projects, but completely disassociates taxation from the purpose it was intended. It would be like going door to door in the name of raising money for homeless people and later dedicating the money to a park or animal shelter or a party for friends. If that behavior is dishonest, how is the government's any different?

That leads us back to the alleged surplus. It doesn't matter how many times state mouthpieces use the word, it is still entirely misleading and Orwellian in its bravado.