The reason for Maryland's perennial deficits is no mystery

Eileen Norcross Oct 17, 2013

Structural deficits continue to bedevil Maryland's budget. According to the chief policy analyst for the Spending Affordability Committee (SAC) anticipates a $400 million gap in next year's budget. A structural deficit is when spending exceeds revenues - a problem the SAC argues is caused by entitlements, mandated budget increases, wage and price hikes. A portion of the shortfall is blamed on the "severe financial management issues," at work in the Developmental Disabilities Administration.

Maryland's budget troubles are not so much due to one poorly managed agency - it's the persistence of structural deficits. The way Maryland claims to limit spending doesn't work very well - if the aim is budgetary restraint.

These are subjects I've tackled in two separate articles for the Maryland Policy Journal. During the Great Recession, Maryland had already spent the previous decade trying to balance its budget. Stimulus money covered some of the gap, but didn't solve the deeper problem. The rules don't work very well. The institution meant to control spending, the SAC,  has typically recommended spending increases over a period of decades based on a subjective set of criteria that are difficult to verify. The SAC only considers a portion of the budget - leaving over one-third of spending outside of the limit. And in recommending a spending limit, the SAC considers the state's "spending needs," indicating the SAC is at once considering policy preferences and "affordability." 

Spending and debt has also grown substantially over the period. The Tax Foundation finds that between 2001 and 2011, spending Maryland grew 30.5% on an inflation-adjusted basis. (

 Instead, we recommend, if Maryland is interested in reining in spending, that the state adopt a clear, easy-to-verify- mathematical rule that ties spending growth to population and inflation growth. 

The Department of Legislative Services issued a critique of our paper, to which my co-author and I responded.

The choice over how, and whether, to limit spending is up to Maryland. The problem with the current approach is that it gives a "False Sense of Fiscal Prudence," to legislators and Maryland residents and doesn't appear to deliver on its tacit aim of controlling spending.