OPINION
Barry Rascovar is a regionally syndicated, independent columnist who specializes in covering state government and politics
Oct. 9, 2018 –At the moment, Maryland is sitting on a $503 million surplus from the last fiscal year. But the news gets even better.
At the last Board of Public Works meeting, Comptroller Peter Franchot announced a $325 million increase in the state’s revenue estimates for the current fiscal year and a $407 million increase in projections for the fiscal year that starts next July.Spending MD’s SurplusPut those surpluses together and Maryland officials could be sitting on $1.335 billion in excess, surplus funds.
We know how gubernatorial contender Ben Jealous would use that pot of gold: He’d spend every last dollar on boosting education aid, making college tuition free for all and making health care available to all.
Obviously, Jealous’ progressive plans would quickly exhaust the state’s estimated surplus — which is why he’s susceptible to those negative ads about being a big spender who would drive Maryland into the poorhouse.
In future years, he’d have to find new revenue sources to replace the surplus funds he would plough into on-going programs. Can you spell T-A-X-E-S?
Incumbent Gov. Larry Hogan, on the other hand, has announced no plans for spending this mountain of cash. He’s a strict fiscal conservative who is unlikely to toss these one-time surpluses into the state’s operating budget.
He also knows the Democratic legislature is unlikely to let him cut taxes with this money, which is a one-time windfall, not a permanent addition to the state’s revenue stream.
He could add this $1 billion-plus surplus to Maryland’s Rainy Day fund. But that would be short-sighted and harmful to the state’s long-term interests.
The state already has close to $860 million stored away for a rainy day (i.e., a deep recession, or worse). Letting another $1.3 billion idly sit in that fund would be neither wise nor prudent.
There are too many unmet needs Hogan or Jealous ought to address in a fiscally sound way. It can be done by making one-time contributions.
Here are areas where the next governor should put the bulk of those surplus dollars:
—Get serious about funding $3.5 billion of deferred state government construction projects.
Treasurer Nancy Kopp noted at the last Board of Public Works meeting that kicking the can down the road, once again, on “crumbling infrastructure and deferred maintenance projects” is pound foolish.
With an ocean of surplus funds sitting there, the next governor should use a big chunk of that windfall cash for the most urgent, unmet state construction needs.
—Pay cash instead of floating more bonds in next year’s capital budget.
Maryland is getting way too close to hitting its self-imposed debt ceiling. The governor can save money on a long-term basis by using surplus dollars to pay for many of next year’s construction projects rather than going to the costly bond market, where you pay principle plus interest — for 15 years!
A pay-as-you-go construction program in the hundreds of millions of dollars would greatly ease Maryland’s pending debt crunch.
—Boost the state’s annual contribution to Maryland’s retiree pension fund.
Doctrinaire conservatives wail repeatedly about the $19 billion overhang from the state’s underfunded retirement program. While those Chicken Little cries — “the sky is falling” — badly miss the mark (those payments will be spread over many decades), it makes sense to take a chunk of the state’s windfall and pour it into the pension fund to help get it back on track.
—Stop complaining about Baltimore City’s school heating and air-conditioning woes and do something about it.
Franchot and Hogan have turned Board of Public Works meetings into “beat-up-on-Baltimore-City” screeds because the city has not met its multi-billion-dollar school infrastructure needs.
They fail to mention that the city is so impoverished it can’t fully address these major deficiencies without a big, additional assist from the state.
Here’s an idea for Hogan and Franchot: Why not fulfill your roles as elected officials and help solve this problem rather than simply complaining?
Surplus funds could be deployed over the next year to speed projects that would fully air-condition schools, repair broken-down heating systems and replace the leakiest roofs. It would be money well spent.
—Dramatically increase next year’s allocation for school construction throughout the state.
There’s a golden opportunity to build more schools on the state’s priority list. Instead of piling up more debt, pay cash for those school buildings — lots of them. The state could even include pay-go money to help the city and other jurisdictions solve their air-conditioning woes.
Right now, Maryland has sufficient money in its Rainy Day Fund (5% of general fund revenues) to guard against a severe economic downturn. Today’s surplus dollars can be put to better use in a variety of ways that help the state bring down long-term debt while attacking some of Maryland’s most pressing, unmet needs.
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