When Gov. Larry Hogan introduced his budget, he proclaimed it to be "structurally balanced" now and forever more and free of the kinds of gimmickry governors of both parties have relied on in the past. No more robbing Peter to pay Paul, he promised. Now Democrats are gleefully pointing out every gimmick they can find, from transfer tax raids to some monkeying with the state's local income tax reserve fund. (Bonus points for anyone who knows what that is.)
This all may sound like incredibly wonky inside baseball, but there's actually a hugely consequential debate going on here. Mr. Hogan's budget represents a real change in the way the state does business compared to the O'Malley administration or even that of the state's last Republican governor, Robert L. Ehrlich Jr. Maryland law establishes a variety of formulas that govern about four-fifths of the state budget, and left alone, they dictate healthy increases in spending whether the state has the tax receipts to pay for them or not. Previous governors and legislatures have put in place annual fixes to some or all of these mandates to keep the budget in balance from year to year. Mr. Hogan is proposing long-term changes that hold spending increases governed by many of these formulas to below the growth rate in state revenues.
Mr. Hogan's willingness to do that has a few clear benefits. It enables him to ease off on the levels of borrowing the O'Malley administration maintained, which led to massive increases in annual debt service payments. If it doesn't immediately and forevermore align state spending and revenues, it is, to paraphrase the Department of Legislative Services, close enough. And while it is not gimmick-free, it relies on quantifiably fewer such maneuvers than previous budgets. In some cases, Mr. Hogan is merely winding down the use of tactics put into place previously by Mr. O'Malley.
But the governor's proposal also begs some big policy questions that need to be resolved. Are the precise choices Mr. Hogan made about how to limit spending growth the fairest ones? The extent to which the budget ax fell on Baltimore City schools, for example, would suggest not in all cases. Do we, in fact, want to roll back the pace of state land purchases through the anti-sprawl Program Open Space? Would cuts to Medicaid really save money, or would they merely shift costs elsewhere? What should be the state's policy on tuition growth at public colleges and universities? Is it right to effectively rescind a raise for state workers, who endured years of stagnant wages and furloughs during the recession?
And perhaps most fundamentally, might it not be better, as suggested by Del. Maggie McIntosh, the appropriations committee chairwoman, to spread the task of achieving true structural balance over two years rather than one?
That's what the state's Spending Affordability Committee recommended, and Delegate McIntosh suggested that would make sense because a rebounding economy could make the task easier. Given national economic trends and recent positive state jobs reports, there is some reason to hope the state's streak of revenues failing to meet expectations could come to an end.
We would understand if Mr. Hogan is skeptical of such talk, as Mr. O'Malley and the legislature tried that sort of gradual approach only to see their efforts quashed by economic weakness. But there are two good reasons he should consider it.
The first is that in certain cases, such as the $35 million in cuts he proposes for Baltimore City schools, his budget is a real shock to the system. Spreading the pain over two years would give those who depend most on state aid a chance to adjust. The second is that Mr. Hogan promised repeatedly during the campaign that he would find and eliminate waste, fraud and abuse in state government. He can't do that until his department heads have time to examine their agencies' operations and root out inefficiencies. But if he's as good as his word, he'll be able to find ways to ameliorate the state's budget picture without affecting the government's ability to provide services. Shouldn't he give himself a chance to deliver on that promise?
We agree with Mr. Hogan's desire for a structurally sound, gimmick-free budget that curtails state borrowing. He should not abandon that goal, but we hope he will be flexible in how he gets there.