Brown's fiscal fallacies

After complaining about his Democratic opponent's repeated and disingenuous attacks on his plans to trim the state budget, Republican gubernatorial candidate Larry Hogan is engaging in exactly the same sort of cynical campaigning with his claims that Lt. Gov. Anthony G. Brown wants to cut funds for school lunches, community colleges and scholarships. That's a shame because there's plenty of substantive criticism that could be levied at Mr. Brown's fiscal plans.

The errors, misunderstandings and false assumptions that were baked into Mr. Hogan's plan for saving $1.75 billion from the state budget have been well documented. But Mr. Brown's ideas for saving $1.5 billion over four years aren't exactly air tight either, and his idea for how to pay for the centerpiece proposal of his campaign — universal pre-K for 4-year-olds — is willful fantasy.


The biggest item on Mr. Brown's list of potential savings — representing $424 million or 28 percent of the total — comes from the decriminalization of possession of small amounts of marijuana, which the General Assembly approved this year. The source of this figure is an American Civil Liberties Union report estimating that Maryland spent $106 million a year on arrests, prosecution and incarceration of people charged with marijuana possession. Even assuming that's correct, there is no way the state is actually going to expend $106 million less per year as a result of decriminalization. The only way to achieve that would be to lay off massive numbers of police officers, prosecutors, judges, court clerks, corrections officers and everyone else who has played a role in marijuana enforcement. And even then, most of the savings would accrue to local governments, not the state.

Mr. Brown, of course, has no intention of doing anything of the sort, and when pressed, he says the benefit from decriminalization will actually be that police, prosecutors and others can spend more time focusing on serious crimes. That may be true, but it's not the same thing as saving taxpayers money.


The next largest item on Mr. Brown's list is increasing efficiency and accountability in the state's Medicaid program — certainly a good idea. He estimates that the state can save $210 million over four years that way. He gets to that number by citing a Pew Charitable Trusts study that said as much as 9 percent of states' 2010 Medicaid budgets went to improper payments and figuring that Maryland, by following other states' leads, could shave 3 points from that figure, which translates to $105 million a year when fully achieved.

However, data from the Centers for Medicare and Medicaid Services show that the national rate of improper payments — which include both overpayments and underpayments, incidentally — has plummeted since 2010 and now stands at 5.8 percent. Moreover, the state the Brown campaign cites as proving large savings are possible is New York, which had the second-worst rate of improper payments. Maryland's rate, however, has historically been below the national average.

The lieutenant governor estimates that the state can save $119 million in incarceration costs over four years by increasing the high school graduation rate. He cites a 2012 Maryland task force's estimate that a 5 percent increase in male graduation rates would translate to a $160 million reduction in crime costs. Using that as a basis and expecting a 2 percent increase by 2019 produces the $119 million figure over four years. Two problems. First, the $160 million figure the task force cited referred to all costs of crime — public and private — and not just those incurred by the state government. And second, as Mr. Brown's plan notes, Maryland's high school graduation rate increased by an average of 0.75 points per year from 2010-2013. What it does not mention is that the budget for Maryland's department of corrections also increased during that time — by an average of 1.1 percent per year.

Mr. Brown proposes to pay for his pre-K program, which he estimates will cost $153.6 million when fully phased in, with proceeds from the expanded casino gambling Maryland voters approved in 2012. However, all of that money is already baked into the state's budget estimates in the years ahead, and there is no extra. Some of the money could, technically, be used to pay for pre-K, but that would mean $153.6 million less for K-12. Essentially, Mr. Brown's plan means either cutting from the existing education budget or finding the money to pay for it somewhere else.

When asked about his errors, Mr. Hogan has admitted fault and offered the explanation that he is running a bare-bones campaign mainly staffed by volunteers. He promises to do better when he has the resources of the state government at his disposal. What's Mr. Brown's excuse?