Maryland's Budget State budgets are tight in most states, and the federal budget deficit was about $1.6 trillion during 2009. It is hard to imagine a trillion dollars, isn't it? In 2009, federal tax revenues (excluding Social Security and Medicare taxes) were just under $1 trillion according to the Congressional Budget Office, and federal government borrowings were over $1.6 trillion. Federal borrowing in 2009 was over 60% greater than federal tax revenues! We can all take comfort that Maryland's Constitution requires a balanced budget (Article III, Section 52), so that our great state cannot find itself in poor financial shape like our national government. Total general revenues for the state were $15.3 billion in the fiscal year ended June 30th, 2009, which was about 4.5% below 2008 revenues. Revenues for 2010 were running 5.5% below 2009 revenues as of April of this year (the last month for which data are available). How has the state managed to balance its budget, as required by our Constitution, in this environment of diminished resources? Answer: it has used hidden borrowing and other gimmicks. Unfortunately, Maryland's fiscal picture is not that rosy, even though we have a balanced budget requirement in our state's Constitution and huge tax increases were passed in recent years. Sadly, our state's budget is not balanced. The federal government borrows enormous amounts of money to cover its day-to-day operations. This borrowing is highly visible. Maryland has taken a different path; its borrowing is hidden. The state should have contributed $2.3 billion to its teacher, state employee and state police pensions and health & welfare programs during 2009, but only contributed $1.3 billion. The $1 billion shortfall is a burden our children will have to bear when payments become due. Underfunded pension contributions force future generations to pay our current expenses. In essence, we are forcing future generations to make loans to us now. This $1 billion shortfall represents 6% of Maryland's 2009 general revenues. The state's pension fund is now underfunded by a total of $33 billion, which is more than twice Maryland's annual general revenue. (See The Frederick News-Post, May 26, 2010.) We should not, as a state, be burdening future generations to cover our current expenses. This is fiscally irresponsible, and the next General Assembly needs to make tough choices on spending and tax policy to be sure that our budget is truly balanced. I welcome your ideas on how Maryland can save money by using its resources more wisely. Even though Maryland's structural budget deficit problem is acknowledged by many, our current leaders prefer to look the other way. Though this may be politically expedient, it is not leadership. For example, Comptroller Franchot wrote in our state's 2009 financial report, "Maryland has seen deterioration in its key economic indicators. However, the State has maintained a fiscally responsible balanced budget." (2009 Financial Report, p. 20, available here.) This report also details how Maryland shorted teacher, state employee, and state police pensions and health and welfare programs by over $1 billion. This is not fiscally responsible, no matter what the Comptroller says. Maryland needs to shift its pension programs from defined benefit programs to defined contribution plans, which has been done all across the private sector. We will not be able to borrow from future generations if we recognize our current employee costs now. We need to reduce spending. Maryland Medicaid program has one of the lowest rates of generic drug utilization in the country, wasting millions of dollars annually. About 61% of Maryland's Medicaid prescriptions were generic in 2009. By comparison, Virginia, Minnesota, and Oregon were at 71%, and others, like Massachusetts, were at 76%. Increasing Maryland's generic drug utilization by 10 percentage points to match Virginia and other states would save Maryland over $31 million annually. Maryland should stop funding stem cell research. Given a choice of spending money on medical research or education, Maryland should focus on the core state responsibility of education and leave medical research to the federal government or the private sector.