When Our Fiscal Hands Are Tied: How Maryland Lost Control of Half Its Budget

Great demands are placed on lawmakers each year to spend taxpayers’ money. The causes are usually noble, well intentioned and passionately argued. As a lawmaker, I know first-hand how painful it is to say no when someone looks you in the eye and pleads for your help. Our human nature makes refusal a difficult choice – an impossible one for some. This said, has the time come for Annapolis to say no more frequently?

I recently asked the Department of Legislative Services (DLS), the Maryland General Assembly’s independent staff agency, a question: How much of each year’s spending is actually required by law – preordained, so to speak? The answer was startling. The fact is that 43.7 percent – almost half – of total annual spending results from constitutional or statutory formulas. Short of amending the state constitution or revisiting years-old statutes, your representatives have little or no say in the disbursement of this money.

This stunned me. It is clear that we enact these laws year after year without seriously considering the cumulative and long-term fiscal implications of our decisions. Evidence of this is reflected in the fact that Maryland is facing a projected structural deficit into the new millennium – $457 million, for example, in fiscal year 2002. Translation: Public expenditures are outpacing public revenues by two to three percent every year.

This issue of mandated funding deserves our serious attention. For this fiscal year, FY 1998 (July 1997 to June 1998), Maryland lawmakers enacted a budget appropriating $15.44 billion1 – a budget that, under our constitution, must be balanced. Projected expenditures must match projected revenues.

On the revenue side, this budget consists mainly of three types of funds:

General funds (monies collected from most taxes to finance the state’s operating programs, such as education and health services);
Special funds (monies collected from specific taxes to finance related projects, like the gas tax for road construction and repair);
Federal funds (monies allocated to Maryland for specific purposes, like housing and environmental programs).

The authorization for these revenue sources can be traced for the most part to specific laws.

On the expenditure side, we also have laws that mandate how we spend these revenues. In budget vernacular well known to us in Annapolis, the term “mandate” refers to items which must be included in the budget the governor submits to the General Assembly. Such spending may be constitutionally or statutorily required. The point, however, is that it is required. It is often not debated or otherwise subject to the ordinary trappings of the discussion process.

For example, the state is constitutionally required to meet its general-obligation debt-service payments. At least partially to comply with this, Maryland dedicates the state property tax (21

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