A bit of "inside baseball" occurrred during Governor Martin O'Malley's state of the state address. Towards the end of the speech, O'Malley denied that Maryland was poised at the "edge of the cliff."

Outside of Annapolis, it seemed like an odd comment that came out of nowhere. To State House insiders, it was a direct reference to legislative staff that have described O'Malley's four years of budget management as placing the state on the "edge of a cliff."

The budgetary "edge of a cliff" symbolism is this: for four years, the guiding principle of O'Malley's budget policy has been robbing Peter to pay Paul. So strewn on the cliff behind him are the four years worth of one-time transfers, fund swaps and "found money."

Peering over the cliff, there are no longer any reserve funds left  to tap.

They have all been depleted. O'Malley has exhausted all available reserves except for the Rainy Day Fund. Tapping the Rainy Day could jeopardize the coveted Triple A bond rating which would cause great embarassment to the administration.

In an interview with The Daily Record, even O'Malley acknowledges that short-term fixes are over: "Two weeks after introducing a state spending plan held together with fund transfers and other one-time accounting maneuvers, Gov. Martin O’Malley said he has 'pretty much exhausted' the short-term fixes that have been hallmarks of his recession-era budgeting.

'We’re running out of things to do to keep the engine from seizing up,'

O’Malley, a Democrat, said."  (the remainder of the Governor's interview is available to The Daily Record subscribers - click here)

More perplexing from the vantage point at the "edge of the cliff" is the fact that there is no plan to reconcile future deficits. No foundation has been laid - no roadmap exists for eliminating the $8 billion of deficits that the next Governor will inherit. Structural cuts have been shunned the last four years. True budget reform is obviously not in the Democrat playbook. The only other options are a second round of massive tax increases (but only after Election Day) and/or a meteoric rise of state revenues from an miraculous economic rebirth (which no Maryland economist is predicting).

So it seems accurate for fiscal analysts to describe O'Malley's policy as leading Maryland to a budgetary "edge of a cliff."

O'Malley's state of the state response is: "From the schools, the laboratories, and the companies of Maryland are emerging the discoveries and technologies that will remake our world. We are not at the edge of a cliff; we are at the threshold of brilliant science, innovative technology and remarkable discoveries that will transform, for the better, the way we 'feed, fuel, and heal' this world of ours."

Does the Governor have an exit strategy from the budgetary "edge of the cliff?" You decide ;-)

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