May 9, 2010

Big Spenders: Who’s the biggest of them all?

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By Len Lazarick
Len@MarylandReporter.com

The fete for former Gov. Marvin Mandel’s 90th birthday was like “Jurassic Park,” columnist Blair Lee IV quipped to me last week.

The political dinosaurs roamed the University of Maryland’s alumni center in College Park, and there was lots of reminiscing about the good old days.

“Marvin Mandel is the best governor I have seen,” said Rep. Steny Hoyer, who was the youngest Senate president in Maryland history when Mandel reigned upstairs at the State House. “His vision was so clear. His vision was ahead of his time.”

One of the reasons Mandel is remembered so fondly is that he spent so much money during his 10 years as governor.

This weekend I sat down with a budget chart compiled by the Department of Legislative Services and my calculator to compile some figures.

Here’s what I found:

Of the last six governors over the last 40 years, the biggest percentage increases in state spending occurred under Mandel, even when adjusted for inflation. And the lowest increases in total state spending in any single four year-term occurred under Gov. Martin O’Malley.

Of course, that’s not the way Mandel remembered it in an interview a few weeks ago

Mandel presided over a state government that had recently instituted a state and local income tax, raised the sales tax and had a growing economy and tax base. I suggested to him that this gave him “a free hand to do a lot of things.”

“It wasn’t a free hand at all,” Mandel said. “It was the fact that we had a good relationship between the legislature and the governor, and we were able to get things done.” And those things got done with no “general” tax increases.

“We tried to control the spending with the needs,” he said.

State spending has already become a contentious issue in this year’s race for governor. So it’s useful to take a hard look at total state spending over the years. “The numbers are the numbers,”  former Gov. Bob Ehrlich says repeatedly, as he did several times on his radio show Saturday. (During the show, the O’Malley campaign twice aired a paid ad mocking Ehrlich’s claims of fiscal restraint – ironically lending financial support to what the Democratic Party has described as an illegal campaign contribution from WBAL.)

Ehrlich didn’t even come in number two as the lowest spender, despite major budget trims he had to make in his first two years. Gov. William Donald Schaefer had lower spending increases in his second term than Ehrlich did in his first term (20% compared to 28% for Ehrlich) and so did Gov. Parris Glendening in his first term (21%).

This was not because Democrats Schaefer and Glendening were fiscal conservatives. They weren’t. But the steep recession of the early 1990s – a recession that impacted Maryland harder than the rest of the country – cut the growth in revenues. The same is true for O’Malley. As he has repeatedly said in making a series of nine budget reductions over the last three years, these budget cuts have been painful and tough decisions. He would have preferred to spend more, but he couldn’t, even with a bunch of transfers from reserve accounts.

Not so for Marvin Mandel. The overall state budget was $1.2 billion when he took over from Gov. Spiro Agnew in 1969. It grew by double digits every year Mandel held office, winding up at almost $4.4 billion in fiscal 1979 – a whopping 268% increase.

Inflation also went up double digits during some of these years, and the Consumer Price Index almost doubled in those 10 years. Even adjusting for inflated costs of goods and services, Mandel increased state spending 85% during his tenure.

While he now says government has grown too big, he was not a small government fan back then. In fact, historian George Callcott writes (P. 283) that Mandel even called a special session at the end of his first year to distribute a surplus that Agnew had left him with a sales tax hike.

No question that Mandel got a lot done. He reorganized and modernized state government, reformed the court system and picked up local governments’ tab for public school construction – spending over $3 billion in today’s dollars.

Looking at the money and spending over the years, there seems little question that when governors have money streaming into state coffers, they spend it. When they don’t have it, they don’t. Ehrlich didn’t have the cash during his first two years and O’Malley hasn’t for most of his term, despite large tax hikes he backed at the beginning of the Great Recession.

If O’Malley had presided over the state government during some of the boom years as Glendening did maybe O’Malley would have matched Glendening’s spending. In 2001 alone, Glendening increased the budget by 12%, more than O’Malley has in his entire term.

You can put many sorts of spin on these numbers, and the campaigns will be spinning through November. But “the numbers are the numbers.”

The budget figures in this story were developed using a chart maintained by David Juppe, a lead budget analyst in the Department of Legislative Services. They come from the Comprehensive Annual Financial Report of the Comptroller, the official audited financial statement of the state. Those numbers don’t include fiscal 2010 and 2011, which are still not complete. For those years, we use projections. The inflation adjustments were done using an inflation calculator on the Internet.