April 5, 2015

Rascovar: In Md. budget fight, first round goes to Hogan

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Hogan at door by Donkey Hotey

Photo illustration by DonkeyHotey for MarylandReporter.com

By Barry Rascovar

For MarylandReporter.com

Even before the final votes are taken the verdict is in: The winner of Maryland’s 2015 budget fight, by a wide margin, is Republican Gov. Larry Hogan Jr.

Actually, Hogan was playing with a stacked-deck.

Maryland governors almost always win these budget fights because they’re the only ones who can add money to programs and priorities; the legislature has the power to subtract, period.

But remember where Hogan started: He was handed a wildly out of balance budget by outgoing Democratic Gov. Martin O’Malley, who had neglected to take strong steps to stem the growing deluge of red ink on the state’s books.

Even worse, projections called for far wider deficits in future years. O’Malley wasn’t up to the task of pulling back hard on the spending reins because he was preparing to leave office and run for president as a darling of the Democratic liberal left.

So O’Malley passed the baton and dropped the budget mess he had created in Republican Hogan’s lap.

Judicious budget cutting

Thanks to the work of career budget analysts and former state Sen. Bobby Neall, Hogan whipped up a budget-balancing plan in about six weeks. It was a tough but judiciously pared-down financial blueprint that went nearly all the way toward eliminating Maryland’s chronic and widening structural gap between revenues and spending.

Hogan also called for long-term steps to ratchet down future spending growth in costly education and health programs.

Democratic legislators didn’t bite on that last Hogan proposal. Yet there is nothing they can do to stop the governor from shrinking budget increases for state and local aid programs in each year of his administration.

The result is a half-loaf victory for Hogan, which is impressive for a Republican in a heavily Democratic state. If he persists over the next three years, he’ll almost certainly pick up the other half of the loaf — and more.

Hogan came into office promising to squeeze excesses from the state budget so he can lower taxes.

He’s started down the first path with considerable success. The tax-cut pledge will be infinitely harder to fulfill, as Democrats have shown this legislative session.

In office, Hogan has proved to be a realist. He recognized that without a truly balanced budget that slowed spending growth, there is no hope of gaining meaningful tax reductions.

He’ll have to keep shaving Maryland’s spending — and especially the state’s overly ambitious and costly capital spending program. Ever-rising health and education costs remain enormous challenges too.

Power sharing

Still, the direction of future Hogan budgets is now transparent to both conservative Republicans and liberal Democrats.

To the relief of Democratic legislators, the new governor isn’t a scorched-earth program cutter. He understands the importance of the social safety net, of education advancements and offering improved health care options.

He also understands the dynamics of Annapolis.

Hogan knows he must share power with the heavily Democratic legislature. He must find common ground and avoid the mistake of the last Republican governor, Bob Ehrlich, who proved too partisan and confrontational.

So far, Hogan is succeeding.

Fiscal turnaround

He’s won this year’s budget battle, regardless of the final negotiations over legislative demands for restoration of funds for public schools and health care.

The new governor has turned around Maryland’s bleak fiscal forecasts in a matter of months, not years.

Once legislative adjournment comes on April 13, Hogan will have the rest of the year to implement spending hold-down ideas, analyze where downsizing makes sense, educate lawmakers on sensible ways to shrink the cost of state government and start eliminating excessive and harmful business regulations.

Not bad for a guy given almost no chance of winning the governorship a year ago — or of working constructively and peacefully with legislative leaders of the opposite party.

Barry Rascovar’s blog is www.politicalmaryland.com. He can be contacted at www.brascovar@hotmail.com

  • Michael B

    Simply amazing what happens when you put the right guy in the state house. It’s about time, Maryland!!

  • MD observer

    One budget cycle is not a Fiscal turnaround. The budget is only a measure of estimated income and expenses. The state’s balance sheet shows $0 equity, headed south by $10s of billions due to a pension accounting change taking effect June 30 this year. The “Rainy Day Fund” is largely a gimmick which will offer the least help with cash flow when it’s most needed. Stress test anyone? And then there’s the billions of liabilities not on the balance sheet; deferred maintenance in the state’s education infrastructure alone runs into the billions.

    There is no fiscal turnaround where the state’s balance sheet is deeply in the red. This budget is in reality an exercise in treading water.

    • Dale McNamee

      I guess that you missed the fact that education funding WAS INCREASED this budget and was getting quite a bit of money in the past budgets as well…

      Given this, maybe you should look into why the “educational infrastructure” is “neglected”… And that is the responsibility of the local school boards as to how & where the funds are spent…

      More money won’t solve the “problem”…

  • R Ferraro

    So, you are asking me to celebrate worse schools, less health care and declining infrastructure repairs, all for tax breaks that will mainly benefit the rich, who have gotten almost all of the gains from the economy over the last several decades. And, this type of budget will hinder economic growth in Maryland just as it has done in every other state where austerity reigns. I see no reason to celebrate. I understand that a decent society has costs and I’m willing to pay my fair share. What we need is for the corporations and the rich to pay their fair share.

    • Parkville Joe

      R Ferraro – Educations spending is at an all time High, Healthcare is funded by the Federal Government now, Infrastructure repairs will be taken care of when he doesn’t fund the Red Line and Purple line. The Middle class is the one who is being destroyed by all the extra taxes O’Malley and the Dems put on us the last 8 years. I just did my taxes and I paid 32% of what I earned to the Government. That doesn’t include sales tax, gas tax and tolls. Thanks for the Democrat Talking points.

      • R Ferraro

        No way you paid 32%, unless you are in the top 1%. And, if you are in the top 1% and paid that much, you need another tax adviser. I’m right in the middle of income earners in MD and don’t pay that much, and I have very few deductions. Taxes are not my problem, but the fact that my income has stagnated over the last decade is. I’m not fooled by the rhetoric of tax cuts, when those tax cuts never benefit me, but do benefit those few at the top who take 95% of all of the income gains.

    • Marty1855

      The rich already pay more than their fair share. The people who don’t are overwhelmingly Democrats – those on welfare, those who don’t or won’t work, those who think they are owed something.

      • R Ferraro

        The rich get most of the welfare and avoid most of the taxes, yet you want to reward these people with more tax cuts. Taxes are not what is hurting the middle class, it is the fact that the rich are taking all of the income gains. Only the rich and the ignorant fixate on taxes.

      • R Ferraro

        The reality of state and local taxes in Maryland was revealed in a new study released last month by the Maryland Center on Economic Policy. It revealed that the poor & middle class have a higher tax burden than the rich in Maryland:
        The poorest 20 percent of Marylanders, those with incomes below $24,000 per year, pay an average of 9.7 percent of their incomes in state and local taxes.
        The richest 1 percent of Marylanders, those who earn at least $481,000 and whose average income is $1.6 million, pay only 6.7 percent of their income in state and local taxes, on average.
        Low- and moderate-income taxpayers, those making less than $67,000, pay the highest share of their household incomes in state and local taxes. The top 1 percent of Maryland taxpayers, those making more than $481,000, pay the lowest share of their household income in state and local taxes.

        • Marty1855

          Why don’t you put those stats into actual whole dollars contributed to society and then see how foolish it looks.

          • R Ferraro

            You really want to go there? You want to say that the burden is greater on rich people because the dollar amount they pay is larger? This is your vision of fairness in taxation? It’s so hard being rich. I do pity these poor souls.

          • Marty1855

            I didn’t say anything about a burden – I’m just saying that the rich are the ones who are truly paying for everything and in return they are demonized for it. 10% of a million dollars does a hell of a lot more good for the country than 30% of 50k.

          • R Ferraro

            The “rich are the ones who are truly paying for everything”? You really believe this stuff? This why we can seldom have a rational discourse on public policy. The myths that abound are truly astonishing.

    • RCocks

      Of course a Liberal would say that. They use the word “Rich” as a buzz word that mean nothing. Just a way to keep fighting the class warfare that the Left had been fighting for years. This State has been hit with over 40 tax increases and still had a budget that is faltering. Suck it up, buttercup, the lapdog Brown lost and the mandate to fix this State has been approved.

      • R Ferraro

        I did not vote for Brown and my views have nothing to do with being “liberal”, whatever that means. I’m not fooled by the buzz words of “tax cuts”, that have very little benefit to the average person in Maryland, but are designed to help those with highest incomes. As Warren Buffet said, the class war has been going on for a long time and it has been waged by the rich & powerful and they are winning. The evidence is clear to see if you open your eyes. The incomes and share of wealth have doubled over the last 40 years for the few % at the top while the incomes of the bottom 90% have been completely flat. Let Hogan propose policies that benefit the bottom 90% and I will gladly support them.

  • Marty1855

    Well done, Hogan. It’s been a great start so far…keep it up.

  • Vidi

    The term “fair share” is quite subjective. What exactly is a “decent society” ? One where we pay teachers way more than social workers and for 10 months vs 12 months? One where we cater to large interest groups vs those with no lobbyists? Is less funding equated with “worse” schools? Baltimore City’s school system is generously funded by the taxpayers of the state, more than any other jurisdiction in Maryland, yet its successes, if any, are few. So how much should we tax the rich to accomplish more funding for schools yet with little change in results?