The pain is just beginning
Not long after the Maryland Board of Public Works approved $413 million in budget reductions to help offset the COVID-19 pandemic recession’s adverse impact on tax revenue, cheers went up in some quarters. Gov. Larry Hogan had initially proposed more than $200 million more in cuts including cost-of-living raises for state employees and teacher retirement contributions but was forced to back down. Maryland State Education Association President Cheryl Bost described it as a “win” crediting Comptroller Peter Franchot and Treasurer Nancy Kopp for standing up to the governor’s “dangerous cuts.” The state’s largest public employee union offered similar kind words. To which we can only add: Not so fast.
Wednesday’s actions by the BPW was little more than an opening salvo and what could prove a long and drawn-out war to restore balance to the state budget, a problem counties and municipalities will inevitably face, too. Whatever programs were spared this week, they could easily be back on the chopping block soon. Experts simply can’t accurately predict how far and fast tax revenues are going to plunge as the pandemic unfolds. The result is not unlike flying an airplane with parts falling off as lowered revenue estimates demand offsetting budget cuts. Lose a strut and it’s no big deal, lose an engine and suddenly you’re kicking passengers out the door. Governor Hogan’s threat that sparing pay raises may ultimately cost thousands of state workers their jobs is surely within the realm of possibilities.
Granted, rescue is possible. If the U.S. Senate and the White House got its act together and approved hundreds of billions of dollars in fiscal aid to states as happened during the last major economic downturn in 2009 (and that Governor Hogan has been a staunch promoter of as chair of the National Governors Association), this plane could land safely. The logic is simple: the federal government has a vested interest in propping up states. Losing public sector jobs is as harmful to the recovery as the private sector variety. An economic recession actually justifies stimulative deficit spending.
Yet it’s hard to be optimistic that well-reasoned economic policy will prevail in these bizarre times when the White House is more focused on honoring Confederate generals and protecting statues than recognizing actual suffering by actual living Americans. And Senate Republicans have gone apoplectic over the prospect of enabling “wasteful” employee pensions as if that represented the bulk of local government spending (news alert: it doesn’t; education and health care do). In short, we can’t expect help.
That means this week’s 2% budget cut is a start. More tough choices lie ahead. Here’s one way they could be made easier: Instead of presenting proposed cuts to the BPW and risking another last-minute rebellion, Mr. Hogan should take a more broadly collaboratively approach sitting down (in person or by video conference) not only with Mr. Franchot and Ms. Kopp but legislative leaders to personally map out a long-term game plan. He could begin by abandoning a cuts-only strategy and put some revenue on the table such as the handful of tax increases already approved by the General Assembly but which he vetoed. One example: a higher cigarette tax that was projected to raise $95 million annually and cut health care costs by 10 times that amount.
Lawmakers have long complained that Mr. Hogan is loathe to share his budget authority, perhaps more so than any Maryland governor in memory, a point made just this past week by House Appropriations Chair Maggie McIntosh during a meeting with The Sun’s editorial board. Democrats even approved along partisan lines a constitutional amendment that will be on the November ballot to give themselves greater power over state spending. Yet Mr. Hogan’s team insist he’s open to ideas about how to balance the budget. Here’s the Republican governor’s chance to prove the Democratic leadership wrong and maybe even share with them not just decision-making but the political pain of budget cuts.