Which governor is better with the state budget?
O'Malley, Ehrlich both take credit, dispense blame
The campaigns of Gov. Martin O'Malley and former Gov. Robert L. Ehrlich Jr. each have fired mortar rounds about how the other side has handled the state's budget.
Each man has touted his fiscal leadership, and each has denigrated the stewardship of his opponent. They both cite numbers to prove their assertions.
It's not hard to find people who praise either man's approach to the state budget.
"I just don't think you can take away the degree of difficulty of managing that budget during that period of time," Del. John L. Bohanan Jr. said of O'Malley's (D) term.
He faulted Ehrlich (R) for talking about reducing the size of government and instead letting it grow. The state budget was about $10.6 billion when Ehrlich arrived in Annapolis and $13.9 billion when he left.
Sen. David R. Brinkley, who serves on the Budget and Taxation Committee, said Ehrlich knew restructuring the government would have to come during his second term.
"He knew there needed to be major systemic changes, but they would have to wait until after the election, but a funny thing happened on the way to the inauguration," said Brinkley (R-Dist. 4) of New Market.
But as the candidates assert their skills at balancing the state's books, could they both be right? To at least one close observer of the state budget, maybe they're both wrong.
"Those numbers are useless. Don't dignify them," said Warren G. Deschenaux, director of the Office of Policy Analysis, the nonpartisan shop that examines legislation and budgetary policy for the General Assembly.
"They both inherited problems. They just started with different quantities of cash balance."
Ignoring Deschenaux for the moment, former Gov. Parris N. Glendening (D) left office with nearly $5.9 billion in deficits projected for the next four years, according to legislative budget forecasts from the end of the 2002 General Assembly.
Ehrlich covered the deficits and the 2007 budget ended with about $1.4 billion in cash, a fact the former governor often points out.
"An important test of a fiscally responsible executive is one who has $800 million to spend and chooses to save it instead, which is what Bob Ehrlich did," Ehrlich spokesman Henry Fawell said. "Most executives in an election year would have spent that money."
O'Malley has called that a "fairy tale" surplus because he arrived with his own set of budgetary troubles. When O'Malley took office, the legislative projections showed nearly $4.4 billion in budget holes to plug during the next four years.
O'Malley's campaign insists Ehrlich "coasted" during good times. In comparison, the current governor "has had to double down and make tough decisions in difficult times," said Tom Russell, O'Malley's campaign manager.
Regardless of the spin, did Ehrlich turn deficits into surplus?
First, all the shortfalls only were on paper. The Maryland Constitution requires the state budget be balanced. So each year, the General Assembly doesn't end its annual session unless it has passed a budget, proposed by the governor, where expenses meet revenue.
Second, out-year projections if negative, they're the so-called structural deficit include the legislature's aspirations, the programs lawmakers would fund if they had the money.
"There always tends to be too much focus on the structural deficit. The structural deficit in the end evaporates every year when we sit down and have to balance the budget," said Bohanan Jr. (D-Dist. 29B) of California, who chairs the Education and Economic Development Subcommittee.
"It doesn't matter what the aspirations are. We keep the aspirations high, but if we can't afford them, we can't afford them."
Third, to come up with a $1.4 billion surplus, Ehrlich includes the "rainy day fund," a reserve account that equals 5 percent of tax revenue. It's meant for emergencies, and it's unlikely to be used.
In 2007, that meant about $650 million was in the rainy day fund and $750 million was surplus. That $650 million still is there.
That one-year surplus was fueled by a bubble in the real estate market. In the following years, the legislative budget forecasts showed more deficits, totaling about $4.4 billion.
And that was before the Great Recession.
O'Malley indeed cut the budget and raised taxes to plug the holes.
Whoever takes office in 2011 will face more than $6 billion in deficits for the fiscal years through 2015.
Deschenaux, of course, insists reading across a budget sheet and adding each fiscal year's imbalance is wrong.
"This arithmetic of adding across is a fallacy. We have an annual budget, not a quadrennial budget," he said.