GBC’s Fry: Maryland’s days of reckoning

Don Fry Commentary on WYPR

Amid declining national economic indicators, the news from Annapolis on Maryland’s fiscal condition is equally disturbing in the wake of Governor O’Malley’s most recent budget cuts of $345 million.

Four months into the fiscal year, the governor has already made two rounds of cuts that, combined, have reduced budgeted General Fund spending by 5 percent. But even so, the message emanating from Annapolis is crystal clear — the pain is probably not over.

Here are some sobering facts to consider.

Maryland’s baseline growth in General Fund revenue so far this fiscal year is only 1.3 percent, when adjusted for the impact of new taxes passed a year ago, according to state budget experts. Significant structural deficits are forecast for the next five years, including shortfalls of $1.3 billion in 2010, and $1.5 billion in 2011.

Comptroller Franchot reports that state revenues this year are below already “exceedingly weak” forecasts and that the nation’s recession “will have a severe and far-reaching effect” on Maryland’s economy.

So far, the governor has managed cuts to the General Fund relatively gently, keeping critical general government programs and services still functioning at levels ahead of last year.

The same can’t be said for transportation, however. Lagging revenue to the state’s Transportation Trust Fund have prompted mass transit officials to announce plans to cut existing levels of commuter bus and MARC service at a time when demand for those services is increasing dramatically.

These are particularly painful cuts.

Maryland’s budget challenges come at a time when there is little appetite in Annapolis for raising taxes. Most lawmakers have pledged not to.

These days of reckoning could be painful, but constructive if it forces Maryland’s elected leaders to do what’s been needed for quite some time. And that is to engage in meaningful belt-tightening and serious fiscal priority setting.

For the Regional Business Report, this is Don Fry, President and CEO of the Greater Baltimore Committee, for 88.1 WYPR, your NPR news station.

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