Maryland's budget would be two-thirds its current size if lawmakers followed the same spending limit guidelines that 28 other states use, according to a new report by economist Eileen Norcross.
While most states strictly rely on mathematical formulas to determine their spending limits, Maryland relies on a committee of lawmakers, called the Spending Affordability Committee, to set its target budget growth each year. Norcross says the committee should be eliminated because its guidelines aren't working.
The committee's spending guidelines have led to an average 5 percent increase in Maryland's budget every year since 1985, increasing the budget from $7 billion to $34 billion, said Norcross, who is the lead researcher on the State and Local Policy Project at George Mason University's Mercatus Center. Her report was published in Maryland Journal.
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Maryland is now grappling with a decade of structural budget deficits that have left the state with a gaping $1 billion budget shortfall annually, forcing lawmakers to reassess the committee's effectiveness.
"Recent years have sorely tested the budgetary concepts customarily employed to account for spending," the committee wrote in an interim report. "The combination of huge mid-year spending reductions, massive federal assistance and extensive reliance on one-time supports makes it impossible to clearly establish a basis for calculating a limit without arbitrary judgments about what should be in or out."
Norcross says the state's budget would be two-thirds its current size if Maryland had relied on the same formulas that 28 other states use, which tie budget growth to either state income or the sum of inflation plus population changes.
"The [committee] process is subjective, subject to gaming, and ties spending growth to anticipated revenue growth, functioning more as a spending target rather than a cap," Norcross said.
Gov. Martin O'Malley's office did not respond to an inquiry about the report.
The spending committee considers a number of economic indicators in negotiating a recommended growth in the state budget, including expected increases in state income and inflation.
But the committee also considers a number of subjective factors, such as possibilities for new revenue proposals. In a 2005 report, the committee recommended 4.37 percent budget growth even while acknowledging that "the existing revenue base of the state is insufficient to support [the growth]," Norcross noted.
"The call for spending discipline by [the Spending Affordability Committee], a committee created to recommend prudent spending limits to Maryland's legislature and governor, highlights the design flaws and erratic application of Maryland's three decades-long experiment," Norcross said. "The [committee] should be abolished."