O’Malley Releases Budget, Rainy Day Fund Bolstered for US Debt Ceiling Stalemate

Gov. Martin O’Malley on Wednesday unveiled his $37.3 billion budget proposal for fiscal 2014, calling his plan a “balanced approach” that preserves the state’s AAA bond rating with spending at below “affordability guidelines” for a seventh straight year.

The plan reduces the structural deficit to $318 million—down from $1.7 billion in fiscal 2007.

“These have been challenging years to say the least.” O’Malley told reporters at Wednesday’s press conference, which was also live streamed from Annapolis. “The biggest economic downturn since the Great Depression, and yet the people of our state have continued to move forward.”

With the state economy finally improving, revenue is expected to rise by 5 percent this year. The proposed budget calls for $3.7 billion in spending for roads, schools upgrades, and other capital projects that will support 43,000 jobs. O’Malley called his plan a “jobs budget.”

Transportation projects alone would support over 16,000 jobs under the proposal, O’Malley claimed.

Spending for education comes to 47 percent of total spending to support the nation’s first ranked public school system in K-12 education, O’Malley said.

Public health programs account for 25 percent of total spending, and 11 percent goes to public safety. The remaining 17 percent will fund other government agencies.

Maryland has recovered 76 percent of the jobs lost during the recession, which is above the national average of 52 percent. The state ranked ninth in the US for the rate at which jobs have been recovered since 2007, according to O’Malley.

The proposal cuts spending by $325 million and keeps the size of state government at the lowest in 40 years.

“We have the fewest number of executive branch employees per capita in our state since 1973,” O’Malley said. “We’ve cut…5,600 executive branch employees over the life of this administration.” He said spending growth of only 2 percent under his administration is the lowest since Gov. Marvin Mandel.

Something for business

Research and development tax credits come to $8 million under the proposed budget, up $2 million over fiscal 2013, and the biotech industry could benefit from $10 million in tax credits, also up $2 million over last year.

The tax credit used to draw the television and film industry to Maryland more than triples to $25 million, and a $3 million tax credit is thrown in to lure cyber security firms to the state.

Budget proposal braces for fiscal calamity in Washington

O’Malley’s budget increases the rainy day fund to $921 million as a contingency against drastic budget cuts if US lawmakers can’t agree to raise the debt ceiling. Deep federal spending cuts would hurt Maryland’s economy more than most states because of the large number of federal employees and government contractors who reside here.

“Even though we’ve been able to apply a balanced approach in Maryland, our national politics is still struggling with restoring that balanced approach in our nation’s capital,” O’Malley said. “In acknowledgement of that, we are increasing the rainy day fund. Cash reserves will total $1.15 billion…to safeguard against the Hari-Kari Congress down the street, and what they might do to our economy because of ideology.”

Gas tax increase not in the budget, but not ruled out

With no tax increases in the proposal, O’Malley would not discuss two ideas floated last week to raise the gas tax. One idea called for raising the gas tax by a penny a gallon, another idea would apply the 6 percent retail sales tax at the pump.

“There will be discussion about the fact that we suffer as a state from a chronic under investment in transportation,” O’Malley said. “I’ve had conversations with the Senate president about how we address that, I think he has some ideas, and I offered my ideas last term, and that still remains a problem.”

Pipkin reacts, says “tax and spend” is alive and well in Annapolis

“Tax and spend continues,” said Senate Minority E.J Pipkin in a brief call to the Spy. “The O’Malley administration has grown from $29 billion to this budget breaking $37 billion mark, which shows sharp increases in spending over the last seven years, and $2 billion in taxes increases over that same period has gone to close the budget deficit, so tax and spend is alive and well in the O’Malley administration.”

Jacobs says budget numbers are manipulated

“The 2014 budget proposed by  O’Malley/Brown has nearly a $1.5 billion increase over last year,” said Del. Jacobs, R-Kent, in a statement to the Spy. “They are touting billions in spending cuts, when in reality, spending has increased by 2 percent since FY 2008.”

“Their accounting of convenience manipulates the numbers, trying to make distinctions between general funds, special funds, and federal funds to make the numbers come out in their favor,” Jacobs said. “But at the end of the day, all are funded out of the pockets of Marylanders. The reality is that they have raised taxes 24 times, which has chased jobs and high-income earners out of our state. We need to focus on jobs now and roll back some of the regulations that have crippled small business at a time of very serious economic instability.”

Smigiel appalled at lack of real cuts

Del. Mike Smigiel, R-Cecil, told the Spy that the spending cuts in O’Malley’s budget are simply cuts in the increases of spending.

“I am appalled that the Governor has not learned to live within his budget as the rest of us have to in our daily lives,” Smigiel said. “I am deeply disappointed that the so called cuts are in projected increases and not real cuts to the budget. We should be making cuts to the size of government, like eliminating Maryland Department of Planning, which redundantly performs the work of local government. With this year’s budget being another increase over last year’s budget, the Governor needs to be more fiscally responsible and stop going to the taxpayers for more money every year.”

 

 

 

 

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