Maryland's Smoking Gun - $1.5 Billion Deficit. Vanished Fiscal Discipline. The facade of a working session of the 2007 General Assembly is being wiped out by the fiscal reality of a $1.5 billion structural deficit. In a one party state where "cover up" of excessive spending is the order of the day.

In office less than 6 months, Gov. O'Malley suddenly ordered his Cabinet secretaries to cut spending by $225 million in the next 2 years -- with overtime labor costs amounting to more than $ 38 million in just one agency. This cost reminds me of a run-in with the Baltimore City School system when a professional firm I represented had been awarded a contract to modernize the maintenance/ cleaning system for school buildings -- reducing costs by 1/3 . The maintenance employees' union blocked any attempt for "cleaning house" through computer programming/ planning --- Why? Because the union wanted to keep overtime benefits flowing . To top it all, Carmen Russo, former Supt.of the City Schools told me " I have no control over the unions" -- and , then-Mayor O'Malley remained silent. The firm that proposed the valid efficiency recommendation, refunded the cost of its proposal to the School System because its was not used to improve service and put funds where needed : to the students and teachers.

On the revenue front, Maryland has an income tax structure that is driving seniors, with productive professional lives, to states like Florida and New Hampshire. Yet, at the same time , what has been called Maryland's "shrinking deep pockets" is becoming a hard fact of life -- to the tune of that $ 1.5 billion. Legislatures and some Governors -- past and present -- prove a critical point: the politicians have lacked the discipline that any small business owner must apply to essential result of the work program/ services provide by that business: What is that discipline?

The answer is not rocket science, but -- unlike business -- states and the federal government are generally unable to exercise the discipline of spending less than income from taxes. Customer income somehow provides a clear discipline of controlled spending by small business CEO's than the typical bureaucrat's perception of unlimited income from taxpayers without sufficient quid pro quo of demonstrable results. One major factor facing businesses is competition in pricing and service. Government lacks that competition, with one exception : political party competition at the policy / decision-making level.

But, Maryland does lacks that competition. We are a single party state where either a Governor from the opposite party (eg. Bob Erhlich) had challenges in overcoming the "iron curtain" held firmly in place by the General Assembly power base of Mike Miller and Michael Busch. In the case of a new Governor (Martin O'Malley), the leverage from the State House first floor is too heavy to infer little more than " We will handle it , Governor -- just smile and agree with us." Softer, but not overly different from the excessive lawsuit environment that is driving doctors out Maryland medical practice -- here , the courageous initiatives of former Gov. Erhlich were blocked.

Historically, has been occasional discipline from the Comptroller's Office. Legendary Louis Goldstein was able to give sufficient fiscal discipline within the Board of Public Works that Maryland's AAA bond rating held reasonably firm. "Louie's" successor, the colorful William Donald Schaefer, was able to at least provide some heat on the nonstop spender Gov. Parris Glendenning , for 8 years. Now, indications are that new Comptroller Peter Franchot appears to have enthusiasm for check writing that is not expected of Maryland's chief fiscal officer.

This problem that is beginning to get media attention ; an example is the solid editorial analysis of Marta Hummel, editorial editor of The Baltimore Examiner. In today's May 14 edition, she notes that "Government, at all levels, must be efficient -- regardless of fat or thin budget years. Maryland faces an estimated $1.5 billion 'structural deficit next year. It is 'structural' because long-term budgeting shows revenues consistently lower than expectations, not a one-time shortfall" . The editorial gives O'Malley a "positive" for ordering his cabinet secretaries to cut $200 million from the State budget. But,as Ms. Hummel notes, "hard choices are ahead. O'Malley paved the way for discussion on the best route for Maryland's budget impasse by "calling for cutting waste in state government". But there is an essential reality applied to that generalization.That reality notes that "taxpayers deserve leaders who turn the mirror on themselves before asking those taxpayers to sacrifice". Will O'Malley, Miller, Busch be able to turn the mirror on themselves?

The real test -- where politicians must be honest and hone in on the real problems -- will come in the 2008 General Assembly session. 2008 is when the rubber meets the road on the need to cut government spending --- not just talk about it.

One barrier is still present : objectivity . As noted in his weekly Montgomery Gazette column , longtime policy/political analyst Blair Lee speaks of the need for serious objectivity by the "4th estate" An example : the Baltimore Sun's periodic attacks on former Governor Erhlich , as if he were still Governor. In reality, he is not.

Maryland urgently needs more attention -- policy and media -- focused on elected officials and the State's bureaucracy to provide real leadership, NOT rhetoric, give those of us who pay the taxes. Thanks to The Baltimore Examiner and Montgomery County Gazette for getting the ball rolling. Let's see if the one-party state will act !

Labels: deficit, Ehrlich, Maryland, O'Malley

  6:34 PM •