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Indiana, Maryland 'jobs budgets' illustrate political divide on taxes, spending

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press
Sunday, January 20, 2013 - 10:01 am

INDIANAPOLIS — "This is a jobs budget."

Indiana Gov. Mike Pence and Maryland Gov. Martin O'Malley both delivered budgets to lawmakers with that exact statement. Following an election cycle that focused on "jobs, jobs, jobs" it shouldn't surprise anyone that Democrats and Republicans are claiming their plans for their states create jobs in the face of a morose national economy and stubborn unemployment.

But the Pence and O'Malley proposals epitomize the reality of the Red State and Blue State philosophy of just what a "jobs budget" looks like.

Pence's first proposal makes former Gov. Mitch Daniels seem like something of a spendthrift. The new governor's budget presentation makes the comparison that Pence would increase spending by 1.4 percent, about half what Daniels did over his eight years. It is an austere plan that limits spending in an attempt to deliver Pence's signature income tax cut plan, which carries a price tag of more than $500 million a year.

"I believe it will meet the needs of Indiana today, it will meet the needs of Indiana going forward and I believe, with the tax relief at the center of it, will provide a framework to get this economy moving again," Pence said.

Six hundred miles to the east, O'Malley delivered a roughly $16 billion budget to lawmakers last week that largely eliminates a structural deficit left by the state's former governor and increases spending in areas like education and salaries for state workers. His new budget lacks the tax increases he relied on to balance the budget last year, but Maryland also rode out the recession without anything close to the spending cuts Daniels made to education, health services and other areas in Indiana.

The Red State cut spending to save money and the Blue State spent money to save services.

They're two states that don't get quite the same attention as fiscal disasters like California, which ran deficits larger than most states' budgets, or Kansas, where Republicans cut taxes so much they temporarily put the state in the red and forced an increase in the state sales tax to balance the books.

But those are the extreme examples, saved more for political talking points and cautionary tales from politicians looking to bolster their own standing. Indiana and Maryland provide a more stable example of how conservatives and liberals have managed their states the last few years.

The jobs situation in both states has improved much since the recession -- Indiana's unemployment rate was placed at 8.2 percent in December and Maryland's clocked in at 6.6 percent -- but remains stubbornly high.

Pence says the answer is returning $500 million a year to taxpayers, via an across-the-board cut in the personal income tax. O'Malley said Maryland needs to continue spending on schools, so he budgeted $336 million for school construction with promises it will help create 43,000 jobs.

"Yesterday, the governor unveiled a fiscally responsible budget that continues record cuts while protecting our Triple A bond rating and investing in key priorities like education and job creation," O'Malley spokeswoman Raquel Guillory wrote in a blog post outlining the new budget.

The two often appear as states through the looking glass. Both cater to a similar number of people, on the order of 6 million, and mesh northern and southern American culture (in Indiana's case, it's more a gumbo of lakes, plains and the upper South regions.)

But those surface-level similarities belie stark differences.

Take the fiscal picture: Indiana achieved and maintained an AAA bond rating from the three major credit-rating agencies throughout the recession by cutting spending and accepting billions of dollars in federal aid. Maryland maintained the coveted AAA bond rating it has held for decades by raising taxes, cutting spending and accepting billions of dollars in federal aid.

Indiana has relied on gambling since 1992 to avoid tax increases, periodically expanding the industry over the years as the money levels off. Maryland only recently joined the fray, approving slots in 2008 and table games last year after the money promised from slots failed to materialize.

And then there are the political ambitions of two men who'd like to be seen as "jobs governors" at a time when Washington leaders look so incompetent.

For Pence, that means conservatives courting him for a 2016 run for the White House, while O'Malley draws admiration from liberals.

It's all about "jobs" for any leader of any stripe seeking the biggest job of all.