Budget Cuts Alone Will Not Solve State's Fiscal Woes, Says New Md Budget & Tax Policy Institute Report

BALTIMORE, Aug. 1, 2011 /PRNewswire-USNewswire/ -- Keeping Maryland on a steady diet of service cuts, without raising any revenues is not healthy for our future. A new report by the Maryland Budget & Tax Policy Institute outlines several revenue options that would solve the state's $1.1 billion shortfall for Fiscal Year 2013, which begins on July 1st 2012. To date, Maryland's primary response to the economic crisis has been to dramatically reduce state government spending. Since 2008, the state has cut $5 billion. These cuts have affected health services, education at all levels, roads and nearly every other public function.

Like other states, Maryland still suffers from the lingering effects of the worst national recession on record. School class sizes are increasing as school districts lay off or can't afford to replace enough teachers to meet enrollment growth. Parents who qualify for the child care assistance they need to continue working are being put on a waiting list. Hospitals are dangerously short‐staffed. Counties and municipalities struggle to maintain roads and operate local transit, with state funding almost entirely eliminated.

"Every dollar state government spends goes back into the economy in the form of salaries, payments for purchases and contracts or various forms of assistance to residents," said Neil Bergsman, Director of the Maryland Budget & Tax Policy Institute. "While calls for belt tightening sound popular, the fact is that pulling back too far can threaten economic recovery."

The report points out that in the past a smaller part of the solution has come from other measures, such as Federal Recovery Act funds, transferring $2 billion from the State's other accounts (e.g. Rainy Day Fund), fees on hospitals and nursing homes that treat patients with medical assistance, and increasing the sales taxes on alcoholic beverages which took effect on July 1st. "The alcohol tax will contribute an estimated $85 million a year. This only amounts to less than one percent of the state's expenditures" said Bergsman.

The state's problems are far from over. Maryland is one of at least 42 states where revenue is projected to be less than what is required to meet public needs in the next fiscal year. For the sake of jobs today and economic recovery in the future, Maryland should employ reasonable revenue options that would reduce reliance on spending cuts and preserve public investments in education, health, public safety and other essentials.

The Institute's full brief can be found at: http://www.marylandpolicy.org/MDBudgetNeeds%E2%80%90Final8.1.11.asp

About the Maryland Budget & Tax Policy Institute

The Maryland Budget and Tax Policy Institute is a nonpartisan research organization that provides timely, accurate and accessible analysis of state budget and tax issues. In addition to general budget and tax research and analysis, the Institute examines issues affecting low income Marylanders and other vulnerable populations and the important community programs that serve them. For additional information, to be added to our email list, or to make a tax deductable contribution, please visit our website at www.marylandpolicy.org.

The Maryland Budget and Tax Policy Institute gratefully acknowledges the Ford Foundation and the Open Society institute, which provide major financial support for the Institute under the State Fiscal Analysis Initiative. Additional general support for the Maryland Budget and Tax Policy Institute is provided by the Eugene and Agnes E. Meyer Foundation, the Fund for Change, the Moriah Find, the Maryland State Teachers Association, the Center for Budget and Policy Priorities, the Zanvyl & Isabelle Krieger Fund and generous individual donors.

The Institute is a project of Maryland Nonprofits, www.mdnonprofits.org.

SOURCE Maryland Budget and Tax Policy Institute