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Hogan's ho-hum cuts

Gov. Larry Hogan plans to propose $68 million in mid-year state budget cuts.
Gov. Larry Hogan plans to propose $68 million in mid-year state budget cuts. (Matthew Cole / Capital Gazette)

It's amazing, as we head into an election year, how much political posturing can attach itself to something as minor as a 0.14 percent cut in the state budget.

Gov. Larry Hogan's budget secretary says the $68 million in proposed spending reductions that will go before the Board of Public Works for approval are needed because the Democratic-majority legislature has failed to heed the Republican executive's warnings about mandated spending. Democrats accuse Mr. Hogan of pursuing the cuts at a time when they aren't necessary in a way that isn't transparent and in a manner that dodges his own responsibility for putting the state on sounder fiscal footing. About the only person who's calling this for what it is — a minor bit of fiscal housekeeping — is Department of Legislative Services Director Warren Deschenaux, who said the move "isn't surprising" and is "prudent."

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Even though the state's financial picture hasn't changed, Gov. Larry Hogan wants to trim Maryland spending mid-year.

That it is. Revenues are coming in fine so far — unlike in recent years, we have yet to see signs that income, sales and other taxes are failing to keep pace with projections — but there's plenty of downside risk on the horizon. President Donald Trump recently threatened to shut down the government if Congress doesn't fund the border wall he previously promised Mexico would pay for. Meanwhile, we're about a month out from hitting the nation's debt ceiling, and given the dysfunction among the Trump administration and the Republican Congress, it's entirely possible that what should be routine legislation will instead provoke a crisis. Given Maryland's deep economic ties to the federal government, either would be a catastrophe.

A general rule of budgeting is that the earlier you cut in a fiscal year, the less severe your actions need to be. Cuts of $68 million approved in September can be spread out over 10 months. The same action, if approved after the General Assembly returns in January, would force more drastic reductions in services. Mid-year cuts at the Board of Public Works have been a staple of both Democratic and Republican administrations, and these are nowhere near the magnitude of the actions governors have taken in the past. The fact that this proposal wasn't prompted by an immediate crisis is unusual, but it shouldn't be. There is no question that we're facing a persistent gap between projected revenues and expenditures that the governor and legislature will have to deal with when the General Assembly reconvenes in January. Why pretend that it's a surprise?

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Gov. Larry Hogan plans to propose $68 million in spending reductions during the next Board of Public Works meeting.
Gov. Larry Hogan plans to propose $68 million in spending reductions during the next Board of Public Works meeting. (Stephan Savoia / AP)

As with anything involving the taxpayers' money, Mr. Hogan's proposals bear scrutiny. We need to hear the rationale, in particular, for reductions to disparity grants to the state's poorest jurisdictions — Baltimore City and Prince George's County prime among them. The money was directed to help fund education, and given the precariousness of Baltimore City Schools finances, it's important to understand the impact of the reduction and to weigh it against the governor's other options. In other areas, we need to hear whether the cuts represent the Hogan administration's ability to find efficiencies or whether they amount to policy decisions on how much the state should spend on, for example, temporary cash assistance or the juvenile justice system. It will be up to Comptroller Peter Franchot and Treasurer Nancy K. Kopp — the other two members of the Board of Public Works — to ask the administration those sorts of questions.

As for the political points both sides are trying to score, neither side is either entirely right or entirely wrong. Governor Hogan is correct when he says that the state has established mandatory spending formulas that routinely require more funds than the state's tax system provides. But this particular action won't change the price of those beans, and the legislation he has previously proposed to deal with that issue has been clumsy and has tilted too much of the balance of power to the executive and away from the legislature.

A line item by line item re-examination of Maryland's spending mandates is long overdue. So is an overhaul of the tax code, in particular to make sure that the sales tax is designed to reflect the economy of 2017, not 1947. We have no illusion that we'll get that kind of debate between now and the 2018 election. More than likely, Mr. Hogan and the General Assembly will patch together a one-year solution as they have — generally with relatively little acrimony — since he took office. But with the state's Commission on Innovation and Excellence in Education due to report on Maryland's pre-K-12 funding system by the end of the year, it's going to be the front-and-center issue for the next governor, whether that's Mr. Hogan or one of the many Democrats seeking to replace him. In that context, $68 million in mid-year cuts is little more than a footnote.

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