Excerpts From Governor Martin O’Malley’s 2013 State of the State Address

February 1, 2013

Martin O'MalleyGovernor Martin O’Malley delivered his annual State of the State address. Below are some key excerpts of the Governor’s remarks as prepared for delivery:

Progress is a choice. Job creation is a choice. Whether we give our children a future of more or a future of less, this too is a choice.

Our story, Maryland’s story, is the story of better choices and better results.
No other state can say at once, that they are #1 in education five years in a row,[1] #1 in holding down the cost of college tuition,[2] #1 in innovation and entrepreneurship,[3] #1 in human capital capacity,[4] #1 in access to dental care for all children, regardless of income,[5] #1 in PHD scientists and researchers,[6] #1 in Research and Development,[7] #1 in businesses owned by women,[8] and #1 in median family income.[9]

When the national recession hit – wiping out jobs and revenues all across our country – other states tried to cut their way to prosperity. Many found this only made things worse. Laying off police officers,[10] fire fighters and teachers,[11] cutting public education,[12] hiking up college tuition by double digits every single year,[13] continuing down the merry path of cutting taxes for the very wealthy, hoping against cruel experience that somehow it would trickle down to the rest of their citizens.

But in Maryland, we made better choices.

We used the pressure of sinking revenues to make government more efficient. For the first time, we started setting public goals with more immediate deadlines.[14] We started measuring weekly performance to make government more effective. We constrained budget growth[15] and made government smaller.[16] We strengthened our Rainy Day Fund[17] and protected our Triple A Bond Rating.[18] We fixed our pension system.[19] We reformed hundreds of pages of regulations,[20] streamlined permitting,[21] and fast tracked jobs projects.[22] We eliminated paperwork, simplified applications for business licenses, and reduced waiting times from months to days.[23] We advanced public-private partnerships to create thousands of jobs at the Port of Baltimore.[24] We put-real time information about the people’s government on the internet, converted paper notecards to digital files, and used smart maps to better target our limited resources.[25]

We cut more state spending than any administration in modern Maryland history.[26]

Knowing that we could not cut our way to prosperity, we balanced record budget cuts with modern investments; investments in the very priorities that create jobs and expand opportunity: educating, innovating, and rebuilding for a better economic future. Progress is only possible with fiscal responsibility and a balanced approach.

The budget before you saves more than recommended by the Spending Affordability Guidelines. It increases both our Rainy Day Fund and our Cash Reserves.[27] It protects our Triple A Bond Rating. It very nearly eliminates the structural deficit.[28] And, it brings our total spending cuts to $8.3 billion dollars over the life of this administration.
These are the choices which enable us to invest in a stronger and better future: more job creation, more opportunity, and a stronger, growing middle class. Better choices. Better results. The proof is in our progress.

[1] In 2012, Education Week ranked Maryland’s public schools #1 in the nation for the 5th consecutive year. Maryland received perfect scores in Early-Childhood Education and Economy and Workforce.

[2] From the 2007-2008 school year to the 2011-2012 school year, tuition at Maryland’s public four-year institutions increased only 2%- the lowest increase in the nation according to The College Board.

[3] The US Chamber of Commerce ranked Maryland #1 in Entrepreneurship and Innovation in 2012’s Enterprising States. The Chamber also ranked Maryland in the Top Five for Economic Performance for the third year in a row.

[4] The Milken Institute ranked Maryland #1 in human capital capacity recognizing Maryland’s highly educated workforce.

[5] Maryland was one of only seven states awarded an A by the Pew Center on the States in The State of Children’s Dental Health: Making Coverage Matter.

[6] According to the National Science Foundation and the Bureau of Labor Statistics Maryland has the most employed PhD scientists and engineers per 100,000 employed workers of any state in the nation.

[7] Maryland receives the most federal research and development dollars per capita in the nation according to the Milken Institute. Research and development investments in Maryland are over 40% greater than that of second-place New Mexico’s.

[8] One-third of all businesses in Maryland are owned by a woman- the country’s highest percentage. While work remains to be done, Maryland’s wage gap is the second lowest in the nation and 12% lower than the national average according to the American Association of University Women and 2011 American Community Survey data.

[9] Maryland’s family median income is $83,823- the highest in the nation according to the 2011 American Community Survey.

[10] In 2011, Camden, New Jersey cut their police department nearly in half laying off 163 officers bringing the size of the department down to its 1949 level. Despite its high homicide rate, Flint, Michigan laid off two-thirds of their police force from 2009 through 2011. On a typical Saturday night in 2011, Flint had only six patrolmen on duty according to a report by the US Department of Justice Office of Community Oriented Policing Services.

[11] More than 300,000 teachers lost their jobs from the end of the recession to July 2012 according to a 2012 White House report. (This is in stark contrast to previous recession recoveries; following previous recessions, local public education was a source of job creation.) As a result of these layoffs, the average student-teacher ratio increased 4.6% from 2008 to 2010 rolling back all of the gains made since 2000. The economy is also affected by such drastic public sector layoffs; if governments still employed the same percentage of the work force as they did in 2009, the
unemployment rate would be a percentage point lower, according to an analysis by Moody’s Analytics.

[12] The majority of states decreased per-student spending from FY2008 to FY2013. Maryland, by contrast, increased per-student spending by 7.4% during that time- the third highest increase in the nation according to the Center on Budget and Policy Priorities.

[13] From the 2010-2011 school year to the 2011-2012 school year, several states made double-digit increases to the cost of public higher education. For example, California increased in-state tuition and fees 20.5%, Arizona increased in-state tuition and fees 16.8%, Georgia increased in-state tuition and fees 15.9%, Washington increased in-state tuition and fees 15.7% and Nevada increased in-state tuition and fees 13.7%.

[14] Governor O’Malley set 15 strategic, measurable goals for the State of Maryland and implemented StateStat, modeled after the CitiStat program he implemented as Mayor of Baltimore City, to track progress towards these goals. At bi-weekly StateStat meetings, State managers meet with the Governor and his executive staff to report and answer questions on agency performance and priority initiatives. Maryland has currently delivered 5 of these goals and is on track to meet 5 others.

[15]The O’Malley-Brown Administration has kept average annual budget growth (excluding appropriations to the Rainy Day Fund) to 2%- 73% lower than Governor Ehrlich’s average annual budget growth of 7.5% and 85% lower than Governor Mandel’s average annual budget growth of 13.4%.

[16] Since taking office, the O’Malley-Brown Administration has abolished 5,738 State positions. Today, Maryland’s Executive Branch is the smallest per capita since 1973.

[17] The proposed FY14 budget increases the Rainy Day Fund by a net $220 M bringing it to $921 M or 6% of revenues.

[18] Maryland’s AAA bond rating was reaffirmed by all three bond rating agencies in July. Maryland is one of only 9 states to earn a Triple A Bond Rating, certified by all three rating agencies.

[19] In April of 2011, the General Assembly approved modifications of Governor O’Malley’s comprehensive retirement reform proposal that preserved a defined benefit for state workers, enhanced funding of the pension system and ensured sustainability of pensions for state workers; reform changes were effective July 1, 2011. The most significant modification for active employees in the Employees’ and Teachers’ Pension Systems was an increase in the contribution level in order to maintain the current benefit level upon retirement. Employees hired on or after July 1, 2011 contribute 7% as well, but earn a reduced benefit. Pension reforms had no impact on benefits for those already retired as of July 2011 or on benefits already earned by active or former employees. 80% system funding- a benchmark for a healthy pension system- will be achieved by 2023.

[20] Following an Executive Order issued by Governor O’Malley in 2011, Maryland’s state agencies with the help of Maryland’s business community submitted recommendations for regulations to be reformed. In 2012, the Governor submitted more than 130 State regulations to be repealed, revised or streamlined to the AELR Committee in the General Assembly. Currently, state agencies are preparing their recommendations for submission to the Committee; some proposals have already been submitted. The committee should be reviewing the recommendations this session.

[21] Following a comprehensive review and restructuring of the access permit process in 2010, the State Highway Administration (SHA) has streamlined its access permits process cutting the average processing time for a permit nearly in half from 28 days in 2009 to 17 days in 2012. SHA reviewed 1,500 projects in 2012 up from 1,000 projects in 2009.

[22] In July, Governor O’Malley broke ground on the State’s first Fast Track approved project. The first phase alone of the Pike & Rose Project in Rockville will create over 550 jobs and $3.7 million in real estate tax revenue.

[23] In January, Governor O’Malley launched Maryland’s Central Business Licensing System (CBL) allowing new business owners to license their business online shortening the time it takes to register a new business from 10 weeks to 5-7 days. Before, new business owners had to full out paper forms and hand deliver, fax or email to the State Department of Assessments and Taxation (SDAT). With CBL, new business owners can establish their business entity and apply for a trade name with the SDAT and establish their tax accounts with the Comptroller’s office all online. On average, 47,000 new businesses are registered each year in Maryland. The Department of Business and Economic Investment estimates that nearly 5,000 businesses will save time and resources registering through the CBL each year.

[24] In June, four new cranes, the largest of their kind in the maritime industry were delivered to the Port of Baltimore as part of the new $100 million 50-foot berth being built under the O’Malley-Brown Administration’ public-private partnership with Ports America Chesapeake. The cranes are 400 feet tall with the boom at its tip, can reach 22 containers across on a container ship, and lift 187,300 pounds of cargo. Being fully electric they will emit no diesel emissions. Construction of the new berth supported 3,000 jobs. The berth will support another 2,700 jobs when it becomes operational.

[25] Maryland’s first-in-the-nation web-enabled map GreenPrint enables our State to target its resources towards our most ecologically valuable areas. GreenPrint both informs our land conservation decisions today and also builds a broader and better informed public consensus for sustainable growth and land preservation decisions in the future.

[26] The proposed FY14 budget cuts spending by $325 M bringing the O’Malley-Brown Administration’s seven-year total to a record $8.3 billion in cuts.

[27] The proposed FY2014 budget leaves $236 M in the General Fund’s balance (18% more than recommended by the General Assembly’s Spending Affordability Guidelines). Combined with appropriations to the Rainy Day Fund, the FY2014 budget brings the State’s total cash reserves to $1.157 B.

[28] In 2007, when Governor O’Malley took office, the structural deficit was approximately $1.7 billion. The proposed FY2014 budget reduces the structural deficit by $318 million (17% of the FY2012 structural deficit). In the past three years we have closed the deficit by $1.656 billion or 91%.


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