By Barry Rascovar
Feb. 2, 2015 — Talk about an uneven fight! When it comes to shaping the Maryland state budget Gov. Larry Hogan Jr. is the pre-determined winner.
Think of the budget as a balloon. The governor decides how much air gets pumped into the balloon ($40 billion). Once this is done, the legislature can let out some air — but it can’t expand the size of the balloon at all.
This year the new Republican governor embarked on a truth-in-budgeting drive, eliminating much of Maryland’s underlying structural deficit with $1.3 billion in cuts.
In other words, Hogan presented the legislature with a dramatically smaller balloon to play with. And there’s nothing lawmakers can do to create a bigger budget balloon short of raising taxes — pretty much of a non-starter this year.
By taking a considerable amount of air out of former Democratic Gov. Martin O’Malley’s overinflated budget balloon of last year, Hogan created his own “deflategate” controversy.
While Maryland’s gregarious governor can’t be compared to the frowning Bill Belichick of the NFL’s “deflategate” kerfuffle, Hogan isn’t making Democrats in the General Assembly happy.
The Black Caucus wants Hogan to reconsider his cuts to education in key aid categories that overwhelmingly impact two of the state’s worst-performing school districts — Baltimore City and Prince George’s County. A number of smaller, rural counties received education cuts as well, angering local educators.
Even Senate President Mike Miller, who is attempting to remain on good terms with Hogan, said, “We’ve got to try to get more money in the classroom.”
Easier said than done, as the cagey Miller well knows.
New Reality for Democrats
Democrats are facing a new playing field. Hogan brings to the table decades of experience as a real estate salesman. He’s got definite ideas on how to run the state in a business-like manner. That begins with keeping spending under control.
Thus, his first budget contains fewer transfers and gimmicks than during the O’Malley years, or even the Ehrlich years. Hogan spread his budget cuts around, though education and health care — the top spending drivers — took the biggest hits.
Hogan also is seeking legislative approval to weaken the state spending mandates on education, health care and the environment, among others. He wants those mandates changed so that required funding grows at a slower rate than the state’s annual spending plan.
This is straight out of Economics 101 — make sure you don’t pay out more than you take in, and build in a cushion.
If Democrats follow Hogan’s request, Maryland’s underlying structural deficit could be on the road to elimination for a few years.
No Free Ride
But Hogan isn’t going to be given a free ride. Compromises on both sides are inevitable. The hit to education will be moderated and some other cuts will be, too.
With guidance from the Department of Legislative Services, lawmakers will make $100 million or more in budget cuts in other areas. They also could juggle fund accounts and transfers in a manner that creates more cash in the state’s general fund budget.
Give-and-take discussions with Hogan and Budget Secretary David Brinkley will likely lead to common ground. In the end, the hit to education won’t be as severe.
Lower Spending Mandates?
As to Hogan’s request to lower on-going spending mandates, the General Assembly may decide to take a firmer stand.
Democrats cannot totally rebuff Hogan’s request to re-write the spending mandates because they then would have to find the money to pay for this new funding — an impossibility without raising taxes.
More likely, lawmakers will meet Hogan halfway — reduce the annual, mandated growth contained in these spending formulas, but not as much as the governor wants.
The sad reality for lawmakers is that Hogan doesn’t need a permanent change in the spending mandates to carry out his fiscal belt-tightening.
Same Script, Same Results
If necessary, he can follow the same budget script in 2016 and beyond as this year, leaving lawmakers with little recourse but to go along with Hogan after hammering out concessions.
Hogan wins either way.
Adjusting to this new playing field isn’t comfortable for Democrats, who are used to having the Democratic governor tack on a few more tax increases to pay for ever-growing, mandated payments to local governments and social programs.
Yet Hogan’s budget adjustments are far from Draconian. He’s practicing traditional, conservative economics without being vindictive or mean-spirited.
Democrats in Annapolis have little choice but to adapt. Their only weapons: Political negotiation and compromise.
Barry Rascovar’s blog can be found at www.politicalmaryland.com. He can be reached at email@example.com.