According to Maryland Gov. Martin O'Malley, much of the blame for the state's current $1.7 billion budget deficit belongs to tax cuts that enacted by the legislature and former governor Parris Glendening over a decade ago. But a careful look at Maryland tax revenues and spending patterns in the years following those tax cuts reveals a very different picture. Chart 1 and Table 1 illustrate the growth differentials between state tax collections and state expenditures for fiscal years (FY) 1996 to 2005 (the latest year of data available from the U.S. Census Bureau).

Between FY 1996 and FY 2000, state tax collections grew at a rate faster than state expenditures. That is not surprising given the booming stock market at the time. After the so-called "dot.com" stock market collapse, the terrorist attacks of September 11, 2001 and the subsequent national recession, the growth in state tax collections slowed dramatically but, despite the economic challenges, grew 1.8 percent between FY 2001 and FY 2003. In comparison, state spending roared ahead by a staggering 14.5 percent between FY 2001 and FY 2003, rising from $21.5 billion to $24.6 billion.

According to Maryland Gov. Martin O'Malley, much of the blame for the state's current $1.7 billion budget deficit belongs to tax cuts that enacted by the legislature and former governor Parris Glendening over a decade ago. But a careful look at Maryland tax revenues and spending patterns in the years following those tax cuts reveals a very different picture. Chart 1 and Table 1 illustrate the growth differentials between state tax collections and state expenditures for fiscal years (FY) 1996 to 2005 (the latest year of data available from the U.S. Census Bureau).

Between FY 1996 and FY 2000, state tax collections grew at a rate faster than state expenditures. That is not surprising given the booming stock market at the time. After the so-called "dot.com" stock market collapse, the terrorist attacks of September 11, 2001 and the subsequent national recession, the growth in state tax collections slowed dramatically but, despite the economic challenges, grew 1.8 percent between FY 2001 and FY 2003. In comparison, state spending roared ahead by a staggering 14.5 percent between FY 2001 and FY 2003, rising from $21.5 billion to $24.6 billion.