Tough Transitions As we enter the autumn season, the transition from summer is always a little trying. For this Citybizlist analyst and blogger, it means leaving an idyllic Maine summer filled with kayaking, painting and good times with family and grandkids. It’s back to the drumbeat of business and civic work. There is an obvious visual change from quiet coastal dirt roads along Pemaquid Lake to Beltways 495 and 695, and an almost visceral change back to the fast lane of Maryland and national issues, accompanied by some unexpected traffic problems:

Maryland has a nearly $2 billion Fiscal '11 shortfall. Newspaper headlines carry the message "State Budget Gap Soars. 2010 Shortfall Near $2 Billion. Deeper Cuts Needed".

This message translates into the plain fact that the Legislature faces the largest projected deficit in our history when it convenes in January 2010. But a more immediate budget concern, according to the Bureau of Revenue Estimates, is that Maryland expects $ 12.3 billion for fiscal 2010 - about $683 below estimates; and for fiscal 2011, $921 million.

What is the current action plan? Not much. Senior Department of Budget and Management bureaucrats estimate that Governor O'Malley will cut up to, but not
more than $300 million from budget projections. This is no way to manage operations in State government. Flooding in Dundalk and bad road conditions on major arteries in and out of Baltimore are unfortunate examples.

Political rhetoric from the politicians rings hollow. The best answer comes from the private sector, as illustrated by a July observation in a "Daily Record" column by Don Fry, President and CEO of the Greater Baltimore Committee, " When the recession's economic carnage recedes and Maryland's leaders have to sort out the fiscal remains, they will have to build a solid strategic game plan: NOT just good intentions, short term tactics and overly optimistic projections."

What a contrast with the observation of one Democratic party delegate: "I don't believe there will be any looking at revenues this coming session because it is an election year". And the Speaker of the Maryland House Michael Busch echoes with "I don't think there is a lot of political will to look at revenues now right now".

Where is your political backbone, Mr. Speaker?


Constellation Energy's Merger/ Sale of Nuclear Business to EDF

As Governor O'Malley and Maryland legislative leaders weave and bob on fiscal discipline under the current $2 billion State deficit, opportunity knocks with an option by Constellation, the largest utility holding company in Maryland. Constellation has improved its credit rating in the past year by two options, accepting a $4.7 billion merger agreement with a subsidiary of Warren Buffet's Berkshire Hathaway, and the cancellation of that option by accepting a $4.5 billlion offer in December '08 from EDF, a French power company. EDF has offered to buy half of Constellation's nuclear business. Just one year after Constellation's selling off of risky businesses and significantly improving its credit rating, this utility holding company has become a political football for the Governor. A plus in the EDF deal is a 3rd nuclear reactor at Calvert Cliffs that could potentially reduce Maryland 's electricity rates by 12%, and significantly increase generation capacity. The failure of a joint venture with EDF holds financial risks including a $130 million income tax windfall that could help offset the State's huge budget deficit. The Public Service Commission must, for once, make a business (not a political) decision to allow a credible acquisition by EDF. In advocating what he has described as "ratepayers interests", O'Malley is looking at an election year impact, but it is short term. A better solution is reflected in the position of the Maryland Chamber of Commerce as stated by its CEO Kathleen Snyder, before the Public Service Commission:

"This project will not only protect the public interest, but also strengthen it by ensuring that we have more reliable energy generated here in our home state".

Stand by, taxpayers, and see where the PSC goes. Will it act independently of Annapolis’ political maneuvering or bend to election year pressures in 2010?  4:24 PM •