Maryland’s budget for the upcoming fiscal year includes some of the country’s largest spending increases, a study has found.
Despite a $1 billion structural deficit, the state will increase its general fund spending by about 11 percent in fiscal 2012, which starts July 1. The increase is the fourth-largest of any state, according to the study, sponsored by the National Governors Association and the National Association of State Budget Officers.
The report details how most states are increasing spending on their paths to economic recovery for the second year in a row after two years of shrinking budgets.
It also warns how such short-term growth could be threatened by rising health care costs and the federal government’s far less stable financial situation.
“While these numbers hopefully mark a turning point in states’ recovery, their fiscal health is not likely to return to prerecession levels for some time,” association Executive Director Dan Crippen said.
Maryland’s General Assembly in April passed a $34.2 billion budget, which includes $14.6 billion in general fund spending — an increase from last year’s $13.2 billion.
The general fund is composed of state revenues used for education, medical programs, state government operations and local government aid. It does not include federal funding and some state revenue sources.
Maryland and Virginia did better than most states during the recesssion because of their proximity to Washington and the federal government, which was not forced to cut jobs as was the private sector.
Three states — Florida, Minnesota and Iowa — will have larger general fund increases this year. Nationwide, general fund spending is expected to increase by 2.6 percent.
Maryland legislators clashed over the budget as Republicans unsuccessfully pushed for deeper cuts to a plan that trimmed some spending while increasing the state’s alcohol sales tax and many fees.
Legislators have indicated that more tax increases could be enacted during this fall’s special redistricting session.
Maryland Business for Responsive Government, which assesses the state’s business climate, said the study is indicative of a tax-and-spend approach.
“While other states tighten their belts, Maryland continues to spend,” said Kimberly M. Burns, the organization’s president.
She said the governors association report “serves as yet another reminder that our state doesn’t have a revenue problem, it has a spending problem.”
Although conservatives often accuse the state’s Democratic majority of reckless spending, Maryland was one of 12 states that decreased general-fund spending last year. Ten states did so this year.
Maryland lawmakers this year were able to eliminate nearly half of a $2 billion structural deficit, although many Republicans wanted a larger cut.
The study also points out that Maryland might not be in as bad of shape as many other states, considering it has the country’s sixth-largest rainy-day fund and was one of 27 states that did not have to institute midyear budget cuts in the past year.
Democrats have argued that a measured approach without drastic cuts has served the state well.
“I think we’ve done a good job,” Delegate Norman H. Conway, Wicomico Democrat and chairman of the House Appropriations Committee, said during the legislative session.
“You can talk about taking all the deficit at one time, but when you get into it, nobody can do that. You need to work on it in a planned approach.”
