Everyone favors a balanced state budget. The people of Maryland expect the state to live within its means, and the state constitution requires the governor to submit a budget with revenues and spending in balance.
But, as demonstrated in the recently completed special session of the General Assembly, how a budget is balanced makes all the difference. The process for enacting bills that balance the budget is in need of serious reform.
Over the past 20 years, governors and General Assemblies have developed a bad habit of stuffing all sorts of loosely related spending and tax provisions into a catch-all bill called the Budget Reconciliation and Financing Act, or BRFA. The recent special session saw not only a BRFA bill but also a State and Local Revenue and Financing Act (SLRFA) packed with multiple forms of tax increases.
This is the sort of bill that you would expect to see in Congress — but not in the Maryland legislature.
Maryland's constitution has required since 1851 that "every Law enacted by the General Assembly shall embrace but one subject." The purpose of this requirement has been to allow legislators to consider each issue independently, on its own merits. It also affords the public a greater opportunity to provide meaningful input on each issue pending before the General Assembly. The use of such omnibus bills as the BRFA and SLRFA damages the transparency of the legislative process and violates the intent of the single-subject rule of the Maryland Constitution.
The Budget Reconciliation and Financing Act of 2012 was introduced during the regular 2012 session with 48 pages, and it had a 116-page fiscal note (complete with a table of contents). According to the Department of Legislative Services, the bill encompassed 55 actions: 11 fund balance transfers, 15 general fund enhancements, one redirection of dedicated revenues, 11 fund swaps and cost shifts, five mandate-relief provisions, six cost control/deferral provisions, three local relief provisions, and three other measures.
The only thing missing was a partridge in a pear tree.
Among the dozens of significant public policy changes included in the bill were: sharing teacher pension costs with local jurisdictions, major increases in individual income taxes, changes to local education aid and higher education funding, taking more than $50 million in employers' workers compensation premiums, and much more.
Although most legislators do not recall an era without BRFA bills, our state managed to have budgets enacted for more than 200 years without such a device. The normal budgetary process until the early 1990s was that the governor would submit a budget, and if the amount of the budget exceeded projected revenues, specified appropriations would be contingent on the enactment of separate legislation. If the separate legislation failed, the contingent appropriations would also fail.
In 1991, Maryland's attorney general surprised many by blessing the process embodied by the BRFA bill, thereby consolidating into one bill dozens of unrelated issues that are intended to reduce state expenditures or raise revenues necessary to balance the budget. Most legislative sessions of the past decade have seen a BRFA, and the bill has grown to the breaking point.
Many legislators are vexed by the BRFA process, as they are overwhelmed by the multitude of significant public policy changes on which they must cast one vote, for or against the bill. The public is likewise shortchanged in public hearings, as a witness is typically allowed two or three minutes to address multiple tax and spending issues. Some issues never receive adequate explanation or justification.
Some will contend that it is difficult to pass a balanced budget, noting that separate bills for each issue would make it more difficult to enact a state budget on time. We at the Maryland Chamber of Commerce disagree. Just as legislators passed balanced budgets for more than 200 years without a BRFA, our current senators and delegates have the ability to judge each issue on its own merits and pass the legislation necessary to balance the budget.
The Maryland Chamber believes the BRFA and SLRFA process has gotten out of hand. It is time to return to the good budgetary practices of an earlier era, with separate legislation for each contingent budget item, and each issue passing or failing on its merits.
Ron Wineholt is vice president of government affairs for the Maryland Chamber of Commerce. His email is firstname.lastname@example.org.