Government growth in Maryland has continued unabated without regard to taxpayers’ interests, according to a new study from the nonpartisan National Taxpayers Union Foundation (NTUF).
“Maryland is one of the richest states in the United States. Maryland’s politicians have taken note of this affluence, and despite an average annual increase in total revenues of 4.7 percent from 1993-2003, total spending has risen at an even faster average rate–8.2 percent each year,” study author Sam Batkins noted in the report.
$9 Billion Savings Possible
The study, released in February, found that if Maryland had restrained spending to population growth plus inflation (about 3.5 percent per year) over the past 10 years, the state’s budget would be just over $21 billion, rather than the $30 billion budget Gov. Robert Ehrlich (R) submitted in January.
This $9 billion in savings amounts to approximately $1,600 per person. Rather than enact spending limits, lawmakers decided to dramatically increase annual spending, forgoing the opportunities for tax cuts.
Legislator Defends Governor
State Rep. Gail Bates (R-Howard) acknowledged the report’s findings but said the current administration is being much more fiscally responsible than prior ones. She said Maryland has a surplus of about $1.2 billion. When Ehrlich took office three years ago, the state was in deficit.
“What the governor did this year is fully fund the rainy day fund, and he has bracketed off $700 million for 2008. He’s really looking at two budget years. Rather than spend our surplus now, he’s trying to protect that money, and all the legislature is doing is trying to figure out how to get their hands on it,” Bates said.
She acknowledged Maryland lawmakers have “almost no spending restraint” and cited as an example the “Bridge to Excellence in Education” act, passed in 2002. That bill raised education costs nearly $500 million a year and had no funding source attached to it, she said.
“About 55 percent of the spending in the Maryland budget is formula-driven, things like Medicaid and education,” Bates said. “Our Medicaid eligibility is 300 percent of the poverty level. Those things drive our budget. The governor this year has funded the formulas. The crazy thing is the Democrats are saying he’s spending more than the previous governor, but he’s doing it because of all the prior bills they passed.”
Economic Conditions Ignored
Batkins documented Maryland’s trend to spend regardless of economic conditions. His report notes:
“One blatant example of Maryland’s propensity to spend occurred during Fiscal Years (FY) 2000-2002. The economic downturn that much of the nation experienced during this period afflicted Maryland’s fiscal condition as well. This did not, however, influence spending in Annapolis. Between FY 2000 and FY 2001, total revenue declined 2.0 percent. Under Governor Parris Glendening and the State Legislature, total expenditures increased an astounding 10.9 percent during that time, the fastest pace in over a quarter century. Despite the economic slowdown, Maryland did little to ensure future taxpayer protections.
“The following year demonstrated even more fiscal irresponsibility. For the second time in as many years, total revenue decreased in Maryland. Instead of cutting expenditures to ameliorate future budget woes, Maryland’s leaders increased total spending between FY 2001 and FY 2002 by 8.6 percent.”
Batkins’ report further shows over a four-year period (1998-2002), yearly net revenues averaged an anemic 0.3 percent rise (in three of the four years receipts actually declined). During the same interval, average annual spending jumped 10.2 percent–“hardly indicative of a government living within its means,” Batkins said.
Spending Increasing Rapidly
The budget submitted by Ehrlich is the largest one (in nominal terms) in Maryland history. Batkins noted Ehrlich’s current budget request increases spending at the fastest pace in over a quarter-century. Overall spending in Maryland is set to increase by $3.2 billion, or more than 12 percent.
Among the lesser-known provisions are $3.5 million for an aquarium and nature center and $8.3 million for a sports complex and new minor league baseball stadium.
“Even with a surplus of almost $1.2 billion, Maryland taxpayers fail to benefit from the prosperity they have created,” Batkins wrote.
“Maryland is one of the richest and most educated states in the U.S.,” Batkins said. “It should be a destination for aspiring entrepreneurs and young professionals. Annapolis, however, has shown the propensity to tax and spend first, and think about taxpayers last.”
For more information …
NTUF Issue Brief 152, “Maryland’s Fiscal Folly: The Taxpayer’s View,” is available online at http://www.ntu.org.