Governor O’Malley learns how to Play with Monopoly Money – “first time in at least 40 years that General Fund spending has declined over a four year period.

Governor O’Malley’s media package brags that his budget achieves for the
“first time in at least 40 years that General Fund spending has declined
over a four year period.”  Most of the statewide media regurgitated that
fact without any critical analysis or evaluation.

O’Malley’s budgetary slight-of-hand gives the appearance that state spending
is in check. From such claims, that one might believe that the operating
budget actually declines in FY11.

The truth is exactly the opposite.  Overall general fund spending continues
to grow under O’Malley.  The trick is that he leaves out of his media
calculations the federal funds and special funds that are used to supplant
state funding.

When state revenues tanked the last two years, state spending had to go
down. The fix for O’Malley was to substitute other funds for the loss of
state revenues and to continue state spending on an upward spiral.

Technically, state funds in the FY11 proposal are $13.2 billion. This is
approximately $400 million less than the amount of state funds in the FY07
budget. That is the rationale for the claim of fiscal responsibility by the

However, total spending in FY11 is $14.8 billion. In other words, in the
harshest of economic times, O’Malley has grown the budget by over $1 billion
during the past three years. He then attempts to deceive you into believing
that the use of federal stimulus funds to grow the budget was actually a cut
in state spending.

The overall budget breakdown is this: $13.2 billion in state funds + $900
million federal stimulus (ARRA) + $389 million federal enhance Medicaid
match (wished for but not yet appropriated) + special funds swaps (of which
the largest is $350 million taken from the counties’ local income tax
revenue fund balance for education) = $14.8 billion.  For details, the
Fiscal Briefing prepared by the Department of Legislative Services is now
available online from the Maryland General Assembly website (click here ).

So the “O’Malley Budget Mirage” is this: when you use federal funds for
services previously paid for with state funds – chalk it up as a “budget
cut” and the public won’t know the difference.


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