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| B | Maryland |
• Population (rank): 5,615,727 (19)
• Average per capita income (rank): $31,888 (2)
• Total state spending (rank): $28,965,977,000 (17)
• Spending per capita (rank): $5,158 (28)
• Governor: Martin O'Malley (D)
• First elected: 11/2006
• Senate: 47 members: 33 D, 14 R
• Term limits: None
• House: 141 members: 104 D, 37 R
• Term limits: None
It takes a lot of guts to raise taxes. But a few months ago, in a special session of Maryland's General Assembly, Governor Martin O'Malley accomplished just that. As a result, the state's finances are in reasonably good balance.
When O'Malley took office last year, he inherited a $1.7 billion budget shortfall, accumulated through tax cuts during the previous administration and big boosts in aid to elementary and secondary schools.
States in similar condition frequently paper over cash needs with accounting gimmicks and by using one-time revenues — and that's precisely what Maryland had been doing for several years. This time, however, with no rabbits left in the hat, the governor convinced citizens and the legislature that a tax increase was the only appropriate option. The revenue changes are expected to generate $1.4 billion in new money, mostly though a sales tax increase from 5 to 6 percent; a corporate sales tax boost from 7 to 8.25 percent; a tobacco tax hike from $1 to $2 per pack; and a new sales tax on computer services of 6 percent.
Despite the new revenue, Maryland remains fiscally vulnerable to weaknesses in the economy over the next several years. Long-term structural balance may hinge on an upcoming referendum that could legalize some 15,000 slot machines at five locations. Estimates of the impact on Maryland's budget vary, but the governor's office argues that Marylanders wager $400 million a year at slots in neighboring Delaware and West Virginia, and that the bulk of this would return to Maryland if the referendum passes.
The current administration has been committed to making Maryland's government more accountable. O'Malley has pretty good experience at this game. As mayor of Baltimore, he launched CitiStat, a means for evaluating services through real-time data. As governor, O'Malley has launched a statewide version, appropriately called StateStat.
The impact of StateStat will not be known for a long time — there are obvious snags in converting a city system to a much larger entity with less-than-spectacular information technology. But promoters of StateStat believe that the obstacles can be overcome and that the system will generate savings proportional to the millions accrued in Baltimore.
StateStat data are used in regular meetings of the governor and his executive team, along with leaders from the agencies being examined. These sessions look at past performance, follow up on previous tasks and set new objectives that allow for real-time adjustments. The program began with a few pilot agencies but now includes most major departments — corrections, juvenile services, labor, health, state police, housing and general services. "StateStat puts agency heads on the spot," says one high-ranking state official. "They are personally held accountable and must answer for daily operations — they can't hide."
Maryland is moving ahead of other states in providing financial incentives to contractors to spur positive results. For example, the Department of Juvenile Services is creating incentives for social-service providers based on attainment of GEDs for those in treatment or subsequent enrollment in college.
Although Maryland is hiring employees more quickly than in the past, it may not be getting the most out of the people it hires. A few years ago, the duties of the central training office were dispersed to the agency level. So the central government does not monitor whether agencies are providing adequate training and development opportunities for staff.
For additional data and analysis, go to pewcenteronthestates.org/gpp.