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Despite Hogan promises, critics see 'gimmicks' in his budget

During the campaign that took him to the State House, Gov. Larry Hogan frequently railed against former Gov. Martin O'Malley's use of "gimmicks" to balance the budget.

But critics say Hogan's spending plan for next year employs some of the same fiscal tricks — moving money from one pot to another to achieve technical balance in the $16.4 billion general fund budget.

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Hogan had promised not to resort to such transfers, and he went on "The Marc Steiner Show" on Friday to denounce the O'Malley administration for raiding accounts set aside for land preservation and other special purposes.

"They drained or stole a billion dollars out of environmental trust funds — put [the money] in the general fund to try and pay for their excessive spending," Hogan said. "None of that is going to happen in our administration. ... We're not going to rob Peter to pay Paul."

Critics point to several cases in which they say Hogan relies on such budget maneuvers, as previous governors have done.

•Hogan has followed O'Malley's lead in using money from the real estate transfer tax — which is earmarked for Program Open Space purchases — to cover deficits elsewhere. For the next few years, legislative analysts say, the program will have only a fraction of the money intended to create parks and preserve farmland.

•Top Democrats are pointing to a decision to use the Transportation Trust Fund to pay for $350 million in environmental cleanup costs that stem from transportation projects. General fund money previously has been used to pay for such cleanup. The General Assembly's top budget analyst said transferring costs into the trust fund has the same effect as taking money out.

•--The same analyst, Warren Deschenaux, described Hogan's budget as "quite virtuous" for significantly reducing the number of such fund transfers. But he called one that remains "as clear-cut a gimmick as I have ever seen in a budget." At issue: $100 million in income tax revenue belonging to counties will be shifted into the state's general fund for one day — the last day of the fiscal year — so the budget is perfectly balanced. The money is to be shifted back the next day. O'Malley once proposed a similar move.

The views of these moves in the legislature break along party lines.

"He promised change, yet he has adopted the same habits that all of his predecessors have used," said Sen. Richard S. Madaleno Jr., a Montgomery County Democrat who is vice chairman of the Senate Budget & Taxation Committee.

But Del. Robert L. Flanagan, a Howard County Republican with expertise in Maryland budgets, said the state has a long history of budget gimmicks, and Hogan did not have time to make a plan that avoids all of them.

Flanagan said Hogan's critics should "take into account that he was required to submit his budget two days after he took office."

Environmentalists looking at Hogan's diversion of nearly $38 million in transfer-tax revenue intended for land preservation are not cutting him any slack.

They also were chagrined when O'Malley made repeated dips into the transfer-tax pot — proposing a $69 million diversion last year alone. O'Malley regarded transfers as a legitimate budgeting tool, but won the legislature's approval to make up for most of the diversions by borrowing money to purchase land.

According to legislative analysts, Hogan has proposed slashing previously approved bond funding for land preservation by one-third next year. In all, advocates say, Hogan has reduced funding for land preservation by more than $115 million next year.

Land preservation would remain on a diet for the next four years after that, as Hogan has proposed reducing by about 90 percent planned borrowing to pay for it.

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Budget Secretary David R. Brinkley said part of the $134 million that Hogan added to the budget for debt service can be seen as repaying money that O'Malley borrowed to acquire land in recent years. Brinkley denied that the administration is abandoning Program Open Space.

"I don't know that it's necessarily going to be smaller," he said

This week, House Appropriations Committee Chairman Maggie L. McIntosh zeroed in on Hogan's decision to move $350 million in environmental mitigation expenses to the Transportation Trust Fund over the next six years.

"That's $350 million that could be spent on roads and bridges and transportation and transit projects," said McIntosh, a Baltimore Democrat.

McIntosh and Sen. Edward J. Kasemeyer, the Howard County Democrat who chairs the Budget & Taxation Committee, sent a letter to Brinkley on Friday requesting a detailed list of transportation projects that would be delayed as the trust fund absorbs more environmental costs.

Brinkley said it made more sense to pay for projects that reduce polluted runoff from state highways as a transportation cost.

"We felt it was appropriate and almost a truth-in-lending to have it put in the Transportation Trust Fund," he said.

To be a gimmick, Brinkley said, a budget move has to involve deceit. He said the one-day transfer of $100 million in county income tax revenue doesn't qualify.

"There's nothing deceitful about it," Brinkley said. "It'll be paid back 24 hours later."

Madaleno mocked the move as "sleight of hand."

"He transfers money out of the savings account at 11:59 on June 30 so that the budget is balanced at midnight, and at 12:01 July 1, he puts it back," he said.

Flanagan said Democrats are complaining about minor matters in a well-crafted budget. "It is a very good step in the direction of fiscal responsibility," he said.

Assembly Democrats face a dilemma in opposing the actions. If they succeed in blocking maneuvers they see as tricks, they could open the door to even deeper cuts to programs they support.

McIntosh declined to categorize any of Hogan's proposals as gimmicks, but vowed to examine each of them.

"There are no decisions yet. We are still poring through this budget," she said.

Brinkley expressed confidence that it will stand up to scrutiny.

"You have a transparent budget," Brinkley said. "We're moving away from the Ponzi schemes we used before."

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