EDITORIAL: Blue-state deficits

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Despite national political trends that should bode well for Democrats, these are not happy days for a pair of local Democratic Party "stars": Gov. Martin O'Malley of Maryland and Gov. Tim Kaine of Virginia. The two regional leaders, activist liberals who aren't terribly shy about spending other people's money, find themselves in the very uncomfortable position of making the political rounds telling their constituents about the need for belt-tightening. At least in the short term, they are taking a political drubbings as a result of 1) the poor national economy, which is depressing state tax revenues; and 2) their own irresponsible spending plans and overpromising.

Maryland is a one-party Democratic state. In the wake of Mr. O'Malley's victory over incumbent Republican Robert Ehrlich two years ago, its political landscape more closely resembles that of Massachusetts than Virginia or any of its Southern neighbors. But across the Potomac River, Virginia has been trending in the Democrats' direction as well. Just five years ago, Republicans dominated the Old Dominion, controlling every statewide office but the governorship. The one Democrat who had been elected statewide was lame-duck Gov. Mark Warner, who was constitutionally limited to only one term. Mr. Kaine, then- lieutenant governor of the state, seemed to operate completely behind the scenes, overshadowed by Republican Attorney General Jerry Kilgore, an activist conservative who became the Republican gubernatorial nominee in 2005.

But in the spring of 2004, Mr. Warner succeeded in splitting Republican Party legislators between advocates of higher taxes and the low-tax Republican majority in the House of Delegates, and Virginia politics has never been the same. In 2005, Mr. Kaine won a convincing victory over Mr. Kilgore in the governor's race. The following year, Sen. George Allen imploded and lost his seat to Democrat Jim Webb. And last year, Republicans lost their majority in the Virginia Senate and the Democrats picked up seats in the House of Delegates. Voter-rich Northern Virginia has become overwhelmingly blue, and Democrats have a realistic chance to carry the Old Dominion in the presidential election for the first time since 1964. But despite the fact that virtually every political trend is going the Democratic Party's way, Mr. Kaine has been having a miserable time of late in Virginia. Last year, the courts struck down the Kaine-supported plan to create regional transportation authorities with the power to levy taxes. This year, the governor's efforts to come up with a new plan to fund transportation came to nought.

Earlier this month, Mr. Kaine's secretary of finance - Jody Wagner, who has come under fire for unrealistically optimistic estimates of the state's fiscal picture - resigned her position. While addressing the House and Senate committees that oversee the commonwealth's fiscal situation, Mr. Kaine announced that Virginia may have to cut spending on education and transportation in the fall because of the state's deteriorating revenue picture - a shortfall that some state lawmakers say could exceed $1 billion. Sales- and income-tax revenues are growing by one-quarter or less of their projected rates. The governor's problems are being exacerbated by his refusal to provide specifics on the extent of the revenue shortfall, and he has said he cannot be more forthcoming until after the Governor's Advisory Board of Economists meets in the fall. All of this begs the real question: As the state's fiscal picture becomes more dire, wouldn't it make sense to convene the advisory board now instead of waiting until the fall, so that Virginians can find out more concrete, specific information about the current situation? Right now, the unavoidable conclusion is that Mr. Kaine wants to delay the specifics for as long as possible - at least until after the November elections, when the fiscal facts won't jeopardize the Democrats' chances of carrying Virginia.

In one-party Maryland, the situation is even more bleak than in Virginia. Mr. O'Malley and the Democratic legislative leadership in Annapolis want Marylanders to believe that they made progress toward fixing the state's $1.5 billion "structural" budget deficit during last year's emergency session on the budget. But as we have noted on this page, if anything, the governor and legislature are in the process of actively worsening the state's fiscal picture: The $600 million a year in slots revenues will eventually be outstripped by the expansion of Medicaid passed by the General Assembly last year. Add to that the plans for a massive expansion of state-provided health insurance being pushed by Lt. Gov. Anthony Brown's Maryland Health Quality and C ost Council, and it becomes apparent that the General Assembly is preparing to hit Marylanders with massive future tax increases.

Right now, state lawmakers are looking at a deficit as high as $1 billion for fiscal year 2010. The tax increases that will be used to close that shortfall will appear miniscule compared with the ones Marylanders will face if the governor and lieutenant governor get their health-care agenda enacted.