Caution is urged in State spending

As Baltimore County's state delegates and senators begin their trek to Annapolis today for this year's 90-day legislative session, there's positive economic news - finally - to savor.

Maryland's budget picture is brightening just as Gov. Martin O'Malley prepares in another week to unveil his final spending plan.

The state's Board of Revenue Estimates reports "a rising possibility of stronger, more sustainable growth in 2014 and beyond."

The state's unemployment rate has dropped to 6.4 percent and is expected to continue inching downward.

Housing stats are projected to rise 14 percent this year and 26 percent in 2015.

Casino revenues should grow 28 percent to over $1 billion, thanks to the fall opening of Horseshoe Casino Baltimore.

All this prompted the state's revenue board to project a 4.6 percent increase in receipts, which in turn led a legislative spending commission to recommend 4 percent growth in Maryland's general budget.

There are caution signs, though - especially the unpredictable gridlock in Congress that could lead to a crisis over raising the U.S. debt ceiling.

In Annapolis, the question is whether O'Malley will use this good news to launch a new spending spree that cements his liberal legacy - and helps his national ambitions.

Or will he heed warning signs and plot an incremental course that doesn't handicap the next governor?

Back in 2002, Gov. Parris Glendening ignored urgent appeals from Lt. Gov. Kathleen Kennedy Townsend, then living in Ruxton, to make cuts in his final budget to close a projected $1.8 billion deficit.

Glendening's refusal helped lead to Townsend's election loss later in the year.

On the other hand, Republican Gov. Bob Ehrlich, who defeated Townsend, accumulated a $2 billion surplus in his last budget.

Ehrlich hoped to use this as a cushion against the looming Great Recession in his second term. It didn't work out that way. Ehrlich lost to O'Malley in 2006, giving the new Democratic governor a windfall he then used for a spending blitz.

That proved a mistake, since the windfall could have been used to offset a steep plunge in state revenues during the recession.

This time, our county legislators should advise O'Malley to take a "go slow" approach in the next budget.

After all, state analysts are predicting a $188 million deficit by July and a nearly $400 million deficit the following fiscal year.

There also are ballooning, unbudgeted Medicaid bills - $200 million - likely to grow due to Maryland's unexpected disaster in implementing Obamacare.

Additionally, the state must contend with soaring debt costs, $150 million, and delayed salary increases, $190 million.

O'Malley needs to remember that his chosen successor, Lt. Gov. Anthony Brown, has made some expensive campaign promises that cannot be met if the state budget spins out of control.

The governor's fiscal decisions will tell us a lot about O'Malley's leadership qualities as he concludes his term and prepares to enter the national political campaign scene.

Barry Rascovar of Reisterstown can be reached at his blog, http://www.politicalmary


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