Hoodoo Economics

Governor O’Malley, in his effort to lay the predicate for a whopping raid on taxpayers’s wallets, has begun touting the incredible degree of fiscal austerity brought to bear since those profligate days of the Ehrlich administration.

When Gov. Martin O’Malley began discussing the state budget deficit with a group of businessmen at a Frederick County Chamber of Commerce luncheon last week, he pitched his administration’s frugality as the first step in putting Maryland’s fiscal house in order.

“We are going to solve it in a number of ways, and in fact, we have already begun,” the first-year Democrat told the crowd. “The budget that we introduced and that the General Assembly passed almost unanimously was a budget wherein the size of your state government, spending-wise anyway, grew by only 2.7 percent, compared to 12.5 percent growth the year before. It all happened in that same flurry of getting sworn in and going to inaugural balls and did not get much attention, but our budget grew by 2.7 percent compared to 12 percent the year before.”

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The question of how much O’Malley restrained spending is important because the governor is using his administration’s belt-tightening as a major part of his pitch for higher taxes. He has said that he could not ask voters to pay more to the state before he makes the government as efficient as possible, and his claim about restraining spending is a key part of his effort to convince the public that he has done so.

Continue below the fold.

O’Malley is dealing in deception. This should be no surprise to anyone who has watched him action.

He conflates all funds received by the state and any decrease in those funds constitutes belt-tightening. So when the federal government reduces grants to the state for any number of activities, O’Malley treats this as if he had held the line on spending. Those cuts do not, I say again do not, have any bearing whatsoever on the $1.5 billion “structural deficit” facing the state. That deficit applies only to those state programs funded directly by our taxes and fees.

When all is said and done, according to the Baltimore Sun:

Factoring out all those one-time costs, Ehrlich increased ongoing general fund spending by about 10.5 percent and O’Malley boosted it by 7.7 percent. The latest round of cuts, approved this month by the Board of Public Works, brought O’Malley’s spending increase down to 6.4 percent.

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Both governors increased spending far faster than state revenues were expected to grow. The 10.5 percent spending increase in Ehrlich’s final budget outstripped revenue growth of 3.8 percent. The gap under O’Malley is narrower but still present: Ongoing spending is budgeted to increase by 6.4 percent, but revenue is expected to grow by 4.5 percent.

Ehrlich’s record aside, the fact is that Governor O’Malley is trying to sell a bill of goods here to justify a tax increase. It is to the Sun’s credit that it exposes this sham even if it can’t resist carrying on its jihad against Bob Ehrlich.






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