GBC’s Fry: Using stimulus funds to plug state operating budget holes

Don Fry Commentary on WYPR

Congress’s recent passage of the $787 billion federal stimulus package no doubt triggered sighs of relief in Annapolis.

By most accounts a federal windfall of several billion dollars will be headed Maryland’s way.

Governor O’Malley has made it clear that stimulus funding will be used, in part, to close the state’s nearly $2 billion deficit. It will enable him to address what he called the “most painful” cuts in his proposed budget for the fiscal year that begins on July 1.

No one faults the governor and General Assembly leaders for welcoming this federal windfall. But let’s hope they keep in mind the implications of using one-time revenue sources – which stimulus money would be — to fund recurring annual operating expenses. The governor’s proposed budget already includes almost a billion dollars in one-time fund transfers and adjustments to close a $1.9 billion deficit. The federal stimulus could make it possible to close the entire deficit with one-time funding sources.

General Assembly leaders from both parties previously voiced concern about using too much one-time revenue in the current budget and have vowed to take a closer look at state spending trends and unfunded mandates, with an eye toward cutting and saving, no matter what windfall revenues arise.

The governor and legislative leaders should vigorously continue pursuing that course of action.

Maryland’s stimulus funding will, in effect, temporarily plug fiscal holes in a still-out-of-balance operating budget. Our state’s structural deficit remains. This gives us more time to address it. But we can’t base our fiscal future on the hope that state revenue will return any time soon to the levels of the previous decade when overall state spending increased by more than 75 percent.

President Obama and Congress have given Maryland a timely fiscal “Christmas in February.” But we can’t rely on Uncle Sam to bail out our budget every year.

We still must find a way to craft a strategic, priority-driven budget that is sustainable based on new economic realities, not old ones.

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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