December 17, 2009

Analysis: State revenue stable, but big deficit looms

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The fact that many considered the state’s $77 million revenue writedown yesterday to be good news says something about the past two years in Maryland government. As the economy tumbled in 2008 the state repeatedly saw disappointments in the hundreds of millions, so officials were understandably happy that the are getting a better handle on where Maryland’s economy is headed.

Still, even if there are no further economic declines, as Comptroller Peter Franchot warned there could be, the state’s still got a huge hole to dig out. Budget Secretary Eloise Foster said the state is still looking at a deficit of about $2 billion for the fiscal year 2011 budget that must be passed next year.

That means more budget cuts are a prospect, though they don’t appear imminent. The state is looking for more help from the federal government. It appears the General Assembly will set tight guidelines for the budget.

The General Assembly’s Spending Affordability Committee will meet today to set its goal for state spending in 2011, and it’s not looking like they’re going to provide much flexibility for the budget.

At a meeting Wednesday with Howard County officials on local budget issues, Sen. Ed Kasemeyer, D-Howard-Baltimore, the vice chair of the Budget & Taxation Committee, said Thursday’s recommendation of the state Spending Affordability Committee “is going to be zero percent.” That would mean there would be no growth at all in the fiscal 2011 state budget. Senate President Mike Miller made the same prediction on Maryland Public Television Wednesday night.

“It’s a grim outlook,” Kasemeyer said.

Gov. Martin O’Malley is not bound by the committee’s recommendations when he introduces his budget, but the General Assembly can cut it to the level it desires. And Foster said her intention is “absolutely” to have a proposal that is within the committee recommendations.

“We have always respected the spending affordability limits,” she said. “I think obviously they’re taking a hard look this year. They’re very concerned about the state of the economy. I can’t imagine there is going to be much growth or increase.”

-Andy and Len