Wednesday, July 18, 2007

Budgets, Taxes, and People

With Maryland’s looming $1.5 billion so-called structural deficit, there is much talk in the air about tax increases of various kinds. For example, yesterday’s Washington Post reports that Governor O’Malley and leading lawmakers are considering substantially increasing income taxes on higher bracket earners as one means of closing the budget gap.

Governor O’Malley recently announced some modest spending reductions for Fiscal ’08, which began on July 1. The Governor is reducing general fund expenditures by $213 million, including $68 million in “reversions.”

In his press release, the Governor says that as part of the budget cuts 147 state government positions will be “eliminated,” of which only 17 are currently filled. The Governor and the press have referred to the reductions in allowed positions as job “cuts.” But here is where language becomes important, and, if Marylanders are going to follow the budget battle, they will have to demand that the politicians speak ordinary English.

What the Governor really is proposing is to reduce the growth in the number of state positions in Fiscal ’08 from the ’07 level. The ’08 budget, passed by the legislature and signed by the Governor only a few months ago --when the looming deficit was known to all--increased the number of non-Higher Education state government positions by 662 over ‘07. See Exhibit G of the state FY 2008 Fiscal Digest and FY 2007 Fiscal Digest. Even if 147 positions are now eliminated as the Governor plans, there will still be a net increase of 515 positions for this budget year. (The state higher education jobs increase by 925 from ’07 to ‘08, but that is another story.)

Thus, talk about “cuts” in the number of state personnel and “elimination” of jobs is misleading, even if inadvertently so. Governor O’Malley is only proposing a reduction in growth of state government positions.

It is never easy to cut jobs. And no one should minimize the difficulty, and even stress, experienced by those who lose a job in either the private or public sector. Before talking about increasing taxes, in a state government with close to 54,000 non-higher ed jobs, it seems the Governor can do better than reduce the growth in state positions from 662 to 515 positions for this budget year.

James F. Byrnes, an FDR confidant, knew a thing or two about the workings of government. After all, almost incredibly, he served as a member of the U.S. House of Representatives, the U.S. Senate, the U.S. Supreme Court, as well as the U.S. Secretary of State. Not to mention Governor of South Carolina. Byrnes once said: “The nearest approach to immortality on earth is a government bureau.”

True enough. But with Maryland facing such a tight fiscal situation, Governor O’Malley and our other political leaders should look to make real spending cuts, including in the number of state positions, before seeking to raise taxes. And Marylanders following the budget debate should insist the politicians respect ordinary English usage by differentiating between actual budget cuts and reductions in expenditure growth.