Maryland Democrats are having a jolly old time criticizing Bob Ehrlich’s budget record. They slam his FY 2005-2007 budgets proposals for exceeding the limits set by the Spending Affordability Committee, while claiming all four of Governor Martin O’Malley’s budgets came in under SAC limits. While a review of the data easily debunks this clever little Democratic trick, it also reveals a deeper deceit a our politicans to spend beyond the state's means while pretending to be fiscally responsible.
As evidence the Democrats link to the 2006 Department of Legislative Services 90 Day Report. The 90 Day Report is an after action memo from DLS detailing the recently completed legislative session. They point to Exhibit A-1.2 on page A-9, a table, which shows a spending increase of 11.59% in Ehrlich’s 2007 general fund budget proposal, which was greater than the 9.60% limit set by the SAC.
Ok fine. However, the same table in the 2007 90 Day Report (O’Malley’s first as governor after his historic $1.4 billion tax increases) shows an 8.13% increase in O’Malley’s general fund proposal, which exceeded the SAC limit of 7.90%. The 2010 90 Day Report for the recently completed session shows O’Malley’s FY 2011 budget proposal with 1.24% growth in the general fund, which exceeded the 0% growth recommended by the SAC. The claim that all four O’Malley budgets were under SAC limits is patently false.
Anyone can manipulate budget data and SAC limits to make all manner of dubious claims about "fiscal responsibility."
What this really reveals is that Maryland’s budgeting process—especially the SAC—is greatly flawed.
There is a false assumption that governors abiding by SAC recommendations are a sign of their fiscal virtue. This assumption of course presumes that SAC recommendations are accurate representations of what the state can actually afford to spend. In fact, SAC recommendations are often divorced from realistic assessments of state finances.
Created in 1981 The SAC is a group comprised of the Senate President, Speaker of the House, budget committee chairmen, along with majority and minority leaders and a citizen advisory committee. State law says only that the goal of the SAC is to “limit the rate of growth of State spending to a level that does not exceed the rate of growth of the State's economy.” SAC recommendations are voluntary and neither the Governor or the General Assembly are bound by it’s recommendations.
In a report for the Free State Foundation, Cecilia Januszkiewicz, a former budget director in the Ehrlich administration notes,
The concept of “spending affordability” suggests a mathematical process that would yield an objective spending limit. Yet, no statutory or regulatory formula exists to determine what is affordable other than the statutory reference to growth in the State economy. Nor has the Committee adopted a consistent approach to measuring affordability.
The SAC has instead resorted to various methods that have resulted in an unbroken string of recommendations for increasing State expenditures regardless of the fiscal circumstances of the State. In the absence of any formula, the method changes each year, in an ad hoc fashion, to validate the desired amount of increased spending.
As an example, Januszkiewicz cites the 7.90% increase in spending SAC deemed “affordable” for FY 2008. Yet both SAC and the Board of Revenue Estimates predicted only a 4.5% increase in general fund revenues.
For those keeping score: the rate of spending increase in O’Malley’s first budget was nearly double the increase in expected revenues, hardly a sign of fiscal discipline on the heels of increasing taxes by $1.4 billion.
In many cases SAC recommends spending increases even though it’s own reports conclude that state revenues and the economy are slowing. In some cases SAC has recommended spending increases even when it recognized expenditures outpaced revenues.
SAC offers it’s recommendations in December but often revises them upwards after the Governor submits the budget. From 1984-2009 SAC has raised it’s initial spending recommendation. Raising the spending level allows the politicians to cut less from the budget and increase spending while hiding behind the political fig leaf of “affordability.”
In the end Januszkiewicz found that the spending affordability process creates and exacerbates structural deficits by providing a “false sense of fiscal restraint,” which allows politicians to spend beyond the state’s means.
There are several solutions to Maryland’s chronic structural deficits—some to be discussed here in the future—the first place to start should be reforming the spending affordability process to make it reflect a realistic assessment of revenues and expenditures.
Correction
My online interlocutor and real world friend Steve and I have been going back and forth over what the Spending Affordability table in the 90 Day report actually means.He says I'm misreading it, I disagree. But I'm willing to admit I may be wrong. I did make a mistake in explaining the 2007 table saying it reflected an O'Malley increase in proposed general fund spending by 8.13%. It wasn't. That number reflects post legislative action. The SAC spending growth limit was set to 7.90%. The General Assembly can only cut from the budget not add to it. The report states legislature reduced the budget to 7.51%. If the legislature had to cut to reduce the rate of spending growth below the SAC limit then the Governor's submitted budget must have been above it. Right? That's what it would seem to me from the table.
However, Who is wrong and who is right on this is irrelevant to my larger argument. Spendig above or below the SAC limit is meaningless becaue the SAC limits aren't truly reflective of state finances. They simply allow politicians to feign "fiscal responsibility" all the while perpetuating structural deficits.
Comments
Mark, you are right on with this. In Baltimore County, they manipulate the guidelines to fit the budget, not require the budget to fit the guidelines. I'm sure this occurs on the state level as well as in every county.
Mark -
Sorry but you misread the table you cite, which the Maryland Democrats never mentioned, incidentally.
http: //www.dailykos.com/story/2010/4/27/861374/-Fact-Checking-Bob-Ehrlichs-Favorite-Blogger
There's no room for interpretation, fuzzy logic, or fudge: Bob Ehrlich, submitted budgets breaking SAC spending caps three years in a row, whereas Gov. O'Malley fulfilled his responsibility by keeping all four of his budgets under the SAC annual spending limit.
Before there were tea parties, Republican Gov. Ehrlich had an uncontrolled appetite for big government spending, and he wasn’t shy about raising taxes to pay for it.
- Steve Lebowitz, Annapolis
Sorry Steve, when you click on the link in the Dems post it takes you right to the table. The mention is implicit
Furthermore, In 2007 O'Malley submitted a general fund budget with an 8.13% increase in spending, which was above the 7.90% SAC suggested increase.
Mark -
The Maryland Democrats' link does not point to the table that you misunderstood. The link opens a PDF file on page one. There is no way for a link to open at a specific page in a PDF. Perhaps your own computer's copy of Adobe reader bookmarked that table for you when you found it.
Anyone bothering to read this can click the link on the word, "slam," in the first graph of your post to open the Maryland Democrats' blog and see that you're wrong. When you click their link to Bob Ehrlich "exceeding spending limits," a PDF file from the nonpartisan Department of Legislative Services 90-Day report opens at page one, not at the table you misunderstood.
- Steve Lebowitz, Annapolis
Mark -
Do you have a link or reference to back up your statement...
"Furthermore, In 2007 O'Malley submitted a general fund budget with an 8.13% increase in spending, which was above the 7.90% SAC suggested increase."
The budget Gov. O'Malley submitted in 2007 can be found at:
http:
//dbm.maryland.gov/agencies/operbudget/documents/2008/fy08_budgethighlights.pdf
Page 89 shows Gov. O'Malley increased general fund spending by $369 million, which is only a 2.6 percent increase. Why do you say the increase was 8.13 percent?
The Spending Affordability Committee recommendation is addressed on page 148 of the PDF: "The Governor's proposed budget is below the recommendation of the Committee on Spending Affordability by $51.0 million. The rate of growth is 7.62%.
Your argument that the Spending Affordability Committee is overly permissive has validity, but that makes Bob Ehrlich's inability to spend within their limits even worse.
- Steve Lebowitz, Annapolis
Steve,
When I first clicked on the link in the MDem post it took me right to that table.
Second, I'd dsay openly flouting meaningless "affordability" guidelines is less of a sin than hiding behind them as O'Malley does to feign "fiscal responsibility."
Steve,
GA can only cut from the budget not add to it. 07 90day report says "final action by the legislature,reduced the budget to a 7.51 percent rate of growth as measured on a spending affordability basis." If GA had to reduce to get under SAC limit then submitted budget was over it.
Mark -
Try clicking the link on another computer. Anyone reading this can try it at home and see the link opens at the top of the PDF, not at the table you misunderstood.
Next read the blurb above your table. You'll see the numbers on the table pertain to SAC scoring formula, which is more than can be explained in the 1000 characters permitted here.
The bottom line is simple, however: Gov. O'Malley submitted a budget proposal in January 2007 that increaed general fund spending by 2.6% in real, non-formula dollars. I provided the link and page number earlier in this thread.
You owe your readers a correction of this post, per my Daily Kos post.
- Lebowitz
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