Maryland cuts state spending by nearly half a billion, but it’s not enough

Today’s jobs report was good and the Congressional Budget Office (CBO) is predicting a V-shaped recovery, with GDP growth topping 12 percent for rest of 2020. However, the economic outlook for the coming years is less than rosy.

In January, the CBO predicted that unemployment would average 4.2 percent for the decade. Now it predicts that the average will be 6.1 percent. It also predicts that GDP will be lower than previously expected over the decade.

Meanwhile, states face the prospect of severe budgetary problems. Maryland, for example, has just cut $413 million from its budget. It stripped funding from universities, community colleges, and anti-crime initiatives.

Say what you want about Maryland’s universities and community colleges. The cuts are going to reduce the quality of the education they provide (unless you’re naive enough to think the diversity deans and staffers are going to bear the brunt of them).

According to the Washington Post, the budgetary problems Maryland faces are typical of the nation as a whole. Revenue has fallen off sharply at the same time that states have had to ramp up spending to combat the Wuhan coronavirus. Thus, the Post reports that “states and cities across the country have started slicing into budgets, laying off workers and delaying major infrastructure projects in a dash to balance the books.”

The putting off infrastructure projects is a big deal, in my opinion. Decaying infrastructure constitutes a major problem — one that both President Trump and the Democrats say needs to be addressed. But suddenly the money isn’t there to address it.

The problem states face is exacerbated by the reality that union power makes it difficult to do cuts the right way. In Maryland, for example, the three-person board that approved the cuts described above balked at eliminating a two percent increase in state workers’ salaries. Although the board reached agreement (by a 2-1 vote) on $413 million worth of cuts, it could not agree on $205 million in additional cuts.

More cuts, from somewhere, are inevitable, though. Maryland is expected to lose $1.2 billion over the next year, and that’s assuming Congress approves a $500 billion rescue package for state governments.

If the recovery is as robust as the CBO is now predicting, states like Maryland will experience smaller than expected revenue shortfalls. But they will still have to tighten their belts for a while, to the likely detriment of infrastructure and education, at a minimum.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *