Crunching some numbers

In terms of determining just how massive the potential ticking time bombs of state debt and dependence on federal government subsidy are, there are few groups as useful as State Budget Solutions. The advocacy group recently released two studies to which those who run for office in Maryland should be paying particular attention.

First of all, SBS annually calculates the total amount of state debt each state labors under as it tries to get the financial house in order. While Maryland’s debt is nowhere near as unmanageable as that of other states like California – which is nearly $800 billion in the long-term hole – their $94.2 billion unfunded liability is nothing to sneeze at. Of that $94 billion, SBS determined that $68.3 billion was unfunded public pension liabilities, $16.5 billion was outstanding bond debt, and $9.4 billion in what they call OPEB liabilities, described as “mainly retiree health care.” Considering our latest budget proposal for FY2015 is just a shade under $40 billion, the debt we are carrying could theoretically take our entire state budget for the next 29 months or so.

SBS slices and dices up these numbers for every state, and in comparison to some others Maryland doesn’t look that bad – while their overall debt is 14th in the country, it’s only 20th per capita. We rank just ahead of Virginia on the overall debt, but Virginia’s per capita debt is just 41st. On the other hand, while Delaware’s overall debt is 43rd by virtue of its small size, their per capita debt ranks ahead of Maryland as Delaware is 17th.

The second study comes at a time when federal influence in state budgets is at an all-time high. The good people at SBS determined that the average state received 31.6% of its budget in the form of transfers from Uncle Sam. Surprisingly, Maryland is just a little below that mean as they only get 30.25% of their money directly from Washington, D.C. Obviously this doesn’t tell the whole story because so many of Maryland’s workers are employed by the federal government so they get the transfer from a middleman who might be a lowly clerical employee or a high-ranking Cabinet officer – as long as they reside in Maryland, the state derives some of its revenue indirectly from the federal government that way.

All this is made more interesting by the fact that Virginia received the third-lowest share from the federal government, with just 23.53% of state funds being federally-supplied. Delaware was also very low in the rankings, getting only 24.46% from the federal government. (The highest was Mississippi at 45.35%, lowest Alaska at 19.98%.)

But imagine the nation trimming its sails to Alaska’s level: we would save about $51 billion annually.

Of course, the idea of block-granting various functions to the states using federal money has strong appeal to conservatives who believe the states could best determine how to spend their money. All that is true, but I never cared for the idea of government as pass-through conduit. To me it would be better just to have the state do all the work.

I’m hoping the four gubernatorial candidates on our side are familiar with this group’s work because they could all stand to benefit from the insight.