The Runback: The Budget Blues Are Here Again
With the predictability of the sunrise, Maryland Democrats have brought back structural deficits
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The Monday Thought
We’re seven months into Governor Wes Moore’s Administration and, predictably, Moore is already talking about potential budget deficits:
Listing concerns about Maryland’s future economic outlook, Gov. Wes Moore (D) made it clear to state and county officials Saturday that there may be some hard fiscal decisions coming up in the next state budget, both for them and for himself as governor.
“It’s going to take the discipline of elected officials at the state and the local government…and yes, it is going to take the discipline of the governor. As much as I want to say ‘yes,’ you’re going to hear some ‘no’s,'” he told assembled state and county leaders at the closing address for the Maryland Association of Counties summer conference in Ocean City.
He did not get into specifics as to what the ‘no’s’ may entail — budget cuts, local project vetoes, or other options. Instead he focused on rallying the MACo attendees to work together in order to help the state reach its full economic potential.
Moore’s remarks come about a month after the Department of Legislative Services issued a report detailing state structural budget deficits that loom after the 2023 General Assembly session, during which most of his legislative efforts were passed by a Democratic majority in Annapolis.
Deficits projected in the report for 2028 exceed $1 billion and approach levels not seen since The Great Recession.
The structural deficits are, of course, not a surprise. Democrats in the General Assembly have been spending recklessly for years, almost always notwithstanding the veto of former Governor Larry Hogan.
Would have been helpful right now had Republicans nominated a credible candidate to run against Moore last year instead of a local Donald Trump fluffer, but that ship already sailed.
This of course will take the wind out of the sales of Governor Moore’s push to eliminate the automatic sales tax increase tied to inflation. But don’t think that Moore and the Democrats won’t be pushing other tax increases. Democrats are already looking at their latest white whale; the mileage tax:
Maryland’s gas tax may one day become a relic if substitutes being considered by a new state transportation commission get traction.
Decreases in revenues flowing to the state’s Transportation Trust Fund could trigger dramatic changes in how the state pays for future road and transportation projects. Moving to a surcharge based on the number of miles driven is one change the state’s new Transportation Revenue and Infrastructure Needs Commission could suggest to the legislature over the next two years.
“The motor fuel tax in America, at best, is a system at risk,” said Ed Regan, a transportation consultant who spoke to the panel. “It served us well for 100 years. It’s an efficient proxy for direct user fee the more you drive the more you pay. But its days are numbered, both through increasing fuel efficiency, and most importantly, a dramatic shift toward fully electric vehicles.”
Moore promised a big game when he ran for Governor. He talked about tremendous state sending in a lot of areas that he is going to have to figure out how to pay for. With the Democrats resurrecting their O’Malley-era structural deficits, a problem that Larry Hogan fixed, Moore is going to have two choices on how to fund them:
Cut unnecessary spending;
Raise taxes.
If Moore had any practical experience whatsoever, he might understand that raising taxes in this economy is going to stunt whatever economic growth Maryland might have in the next five years. He also might realize that the quickest way to close a budget gap is to stop unnecessary spending in order to free up money to pay for the Administration’s actual priorities.
But since Moore is a political naif who is being led around by Democratic legislative leadership, this will almost certainly end i
Speaking of no experience and no common sense, The Baltimore Sun Editorial Page, as they are wont to do, thinks the state can have its cake and eat it too:
If the governor is serious about belt tightening, he needs to start at his own desk. And so instead of lecturing county council members or midlevel bureaucrats at MACO, he really ought to ask his legislative staff to look for specific ways to slow the growth of the executive branch including his own initiatives. Looking for suggestions? He can start with the military retirement giveaway. After that, he might stop supplementing the capital budget with operating funds (to the tune of $300 million or so this year alone), not impose any more gas tax holidays (at a cost of $100 million in 2022 which, granted, was before his time in office) and revisit the tax on cannabis given legalized weed is only expected to raise $16.5 million annually despite the state’s projected billion dollars in sales. Finding a way to pay for Baltimore’s Red Line revival without bankrupting the Transportation Trust Fund would be helpful, too.
The Sun’s entire plan is to tax military retirements again and raise the pot tax but still pay for an unnecessary multibillion transportation boondoggle that was already wisely canceled once.
Maryland is desperately in need of adult leadership, but there is nobody in sight stepping up to provide that leadership. Maryland is looking at yet another fiscal crisis and this time, there are few credible leaders left to stand up and say stop the madness.