Reporters' Notebook

Maryland Gov. Martin O'Malley addresses states' immediate economic future. Capital News Service photo by Laura E. Lee

State governments have to make “tough choices” that include spending cuts and balancing budgets, said Gov. Martin O’Malley at the National Press Club on Tuesday as keynote speaker for the Outlook in the States and Localities conference hosted by Governing magazine.

“Constant streamlining, constant closings, constant consolidations have become the new normal of governing and I am sure that is true in all of your states,” he told the crowd of about 200 people.

The difficult decisions are necessary, he said, to improve the future for the next generation.

“No generation of Americans ever built monuments to their own comfort,” he said. The tough decisions are made because “we want our children to be winners in this change to a new economy.”

At several points in the speech, O’Malley echoed President Obama’s words from last week’s State of the Union about “winning the future.”

With 87 cents of every general fund dollar spent on public education, public safety and public health, there are limited resources for other areas of government like the judicial system, environmental protection and economic development, he said.

Part of the current economic struggle is the result of increased health care costs, O’Malley said. “I think one of the biggest drains on the innovative capacity of our economy in recent years has been the rapidly escalating, out of control cost of health care.” Businesses have difficulty investing in new hiring, marketing, expansion and skills development when health care costs are so high, he explained.

O’Malley warned that states that do not embrace health care reform risk losses in the long-term. “We believe that states that are slow to adapt and slow to embrace this will lose out in this new competitive, this innovation edge, that will come to those states that figure out how to control those costs,” he said.

All the economic news is not bleak. The state gained 26,000 net new jobs in the innovation economy last year– the best year of new job creation since the recession began, he said.

O’Malley praised the education system, noting that, unlike any other state, Maryland’s university system has avoided any tuition increase in the last four years.

He explained that Maryland governmental units track and monitor data to improve efficiency and reduce costs.

Governing magazine named O’Malley a 2009 Public Official of the Year for his “data-driven approach to policy and administration.”

The speech comes in advance of the governor’s fifth State of the State address scheduled for Thursday at noon.

-By Capital News Service’s Laura E. Lee