Shortfall highlights fiscal irresponsibility
One thing that Republicans have been consistent on the last several years is the fact that Governor O’Malley and his administration have no clue when it comes to rational fiscal policy. We all noted the idiocy of simultaneously increasing spending and taxes would do nothing to serve Maryland’s long-term fiscal woes. And we were right:
Maryland could experience a budget shortfall in the range of $200 million for the fiscal year that started last week if the sluggish economy continues, lawmakers learned yesterday.
Legislative analysts reported that collections of income and sales taxes, the two largest sources of general fund revenue, have fallen short of expectations, a trend that shows no signs of changing soon.
Of course one thing that we noted time and again was the fact that increases in taxes would lead to decrease tax revenues. While a small portion of that can be attributed to the national economy, the bulk of the difference in revenues collected vis-a-vis revenues projected has a lot to do with the impact of this profligate spending and irresponsible tax hikes.
A story in today’s Capital just further exemplifies what most of us already knew:
Although the General Assembly raised a slew of taxes during last fall’s special session to help close a $1.5 billion deficit, data presented to the committee shows the gap between spending and revenues won’t be fully closed in the near future, unless November’s slots referendum passes. Even with the anticipated windfall from expanded gambling, the state will be in the red until fiscal 2013.
If all revenues were growing at their normal rates, the state would have $500 million more over the course of fiscal 2008 and 2009 than it does now, said Warren Deschenaux, the director of policy analysis.
“If things would grow as they usually do, we would be OK,” he said.
Legislators should start thinking about what can be adjusted to make up for poor-performing revenues, Mr. Deschenaux said. Although the state could tap into reserves, one-time fixes for long-term problems could exacerbate the deficit.
“That gap will get wider,” he said. “We’ll be in a near calamitous situation.”
Woulda, coulda, shoulda. Sure we would be OK if things were growing “as they usually do.” But when you have people who don’t understand economics trying to raise taxes and raise spending in the middle of a recession, a calamity usually ensues.
The current fiscal situation is entirely of the Democrats making. Sure, they will try to foist blame upon Governor Ehrlich for his final budget which was, in fact, excessive in its spending. But at what point will the Governor and the General Assembly admit that O’Malleynomics as a policy is failing, and that it is time for our state to see lower spending and lower tax rates? Will Maryland Democrats after accept the need to spend within our means and to set taxes at a morally responsible rate?