October 26, 2009

Analysis: Rich state, but social services funded poorly

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By Len Lazarick
Len@MarylandReporter.com

At last week’s meeting of the legislative workgroup on state, county and local fiscal relations, Sen. Ed Kasemeyer raised a question that has bothered a lot of people: If Maryland is such a rich state, why are some of our government functions — such as higher education and social services — funded more poorly than other states where income is lower?

Kasemeyer, co-chairman of the workgroup, as well as vice-chairman of the Budget and Taxation Committee and Senate majority leader asked what the state is spending its money on, if not those services.

John Rohrer, the General Assembly’s fiscal and policy analysis coordinator, suggested that a state with higher-income should need fewer social services than other states with more poor people

But the answer Kasemeyer may have been looking for was in documents presented to the workgroup Sept. 17 in an overview of state and local spending compared to other states.

“Maryland is above average for state and local spending on education and libraries; public safety; housing and community development; and natural resources,” wrote the Legislative Services analysts, but the same is not true elsewhere in the budget.

“Maryland is below average for state and local spending on social services and utilities,” and about average on transportation. Specifically, “per capita spending on health and social services is relatively low in Maryland with all surrounding states having a higher per capita spending.”

That broadly answers Kasemeyer’s question, but it doesn’t explain why that’s the case. It is likely a result of a complicated series of legislative and executive decisions made over many years. It’s clear the 18-member workgroup is going to take its time making recommendations for untangling those decisions.

Both Kasemeyer and the co-chairwoman, Del. Adrienne Jones, D-Baltimore County, said they don’t expect to make major recommendations on funding formulas and mandates until after the upcoming legislative session.

The funding disparities were likely on Kasemeyer’s mind at a Thursday night meeting as he heard story after story about the cuts in services to the developmentally disabled. The number of those getting services – 22,000 with 19,000 more on the waiting list – is small compared to 843,000 in public schools. But the disabled and their advocates have decided to make their voices heard more loudly in the halls of Annapolis with the End the Wait Now campaign, as laid out in our story today.

The bipartisan legislative support for more funding highlights the complexity of the state budget process. Lawmakers cannot increase the budget proposed by the governor, who can cut the budget through Board of Public Works action after the General Assembly leaves Annapolis. Many of the mandates and funding formulas passed over the last 30 years have been a result of this dynamic. Legislative spending requirements force the governor to spend money on specific programs at specific levels.

In a way, the advocates for the disabled are seeking yet another mandate. They are pushing a five-cent per drink increase in alcohol taxes, the proceds of which would be dedicated to aid for the developmentally disabled. Action seeking to hike these taxes to fund worthy programs has never gotten out of committee, and the question is whether the well-organized End the Wait Now campaign can overcome the liquor lobby, and pass higher taxes in an election year.

SLOTS: Looking for positive news on revenues, as Gov. Martin O’Malley surely must be, the news last week on video lottery terminals was not encouraging.

The Anne Arundel County Council continued to dither on zoning approval for a slots at Arundel Mills; the Lottery Commission insisted that approval must come before it grants a license. So far, only two of the state’s five allowed licenses have been issued, and those are for relatively small projects. The sophisticated video lottery terminals have yet to purchased, and the commission has yet to collect license fees for an expanded Baltimore City site or to vet its unnamed principals. The state hasn’t projected much money from slots in fiscal 2010 and 2011, but it now looks like there may be even less, and the revenues for 2012 and 2013 have yet to be officially written down from their optimistic figures.

The New York bond rating agencies have continued to notice of the fall-off in slots income projections. Moody’s Investors Service said Oct. 15 that these “revenue performance expectations may be overly optimistic in light of the economic downturn and early indications of weaker demand for video lottery licenses.”

AHEAD: It’s relatively light week ahead on the public schedule. The governor and his cabinet are in Laurel for another “Capital of the Day” event at noon today. The capital does not really get moved from Annapolis, given the constitutional restrictions, but it’s part of his “getting to know you” tour.

Tuesday, the Senate Judicial Proceedings Committee will have a hearing on the firing of the state public defender. On Thursday, the Business Tax Reform Commission meets in the afternoon.