An Update On The General Assembly
The Maryland General Assembly is back for the 437th legislative session. On January 18, Governor Larry Hogan introduced to the legislature a $17.1 billion operating budget for Fiscal Year 2018.
This is the third year that Governor Hogan has introduced a budget that is 100 percent structurally balanced. The FY2018 budget meets or exceeds the recommended level by the legislature’s spending affordability committee. It also leaves a fund balance of $144 million, which is more than the recommended amount by the committee. It does not raise taxes, cut services or raid special funds. In addition, it leaves $1 billion in reserve and provides record funding of $6.4 billion for K-12 education.
Governor Hogan’s capital budget limits borrowing to $995 million. This is necessary in order to keep the state’s debt service payments from rising. Governor Hogan stated that with the past two fiscal year budgets and this fiscal year budget, the state will save nearly $700 million in debt service payments. The governor recognizes that more needs to be done to reduce the debt.
Education is a top priority in the governor’s budgets; therefore, two-thirds or $6.4 billion of the capital budget funds education projects, including school construction. This fully funds all state aid programs with a growth of $60.4 million for local schools. FY2018 has designated $334 million for school construction projects, with Baltimore City receiving the greatest amount of the budgeted funds, more than any other jurisdiction in the state. Once the FY2018 budget passes, Governor Hogan will have invested nearly $19 billion into education since taking office.
Unfortunately, the legislative mandated spending is 83 percent of the operating budget. Because of the mandates, spending will grow at a rate faster than projections of current revenue. The state has a large structural gap that will continue to grow due to the mandated spending. In order to reduce this gap, the governor has introduced legislation called the Common Sense Spending Act of 2017. As defined by the governor, this act “would limit the growth of mandated spending in FY2019 by giving the state flexibility to limit mandates that grow faster than the state’s revenues, while preserving funding for critical areas like education and debt service payments.”
One additional act that Governor Hogan proposed is the Fiscal Responsibility Act of 2017. This act will “address revenue volatility by ending the practice of using temporary revenue spikes to fund known recurring future expenses.” In the years that there is an excess of revenue, the surplus will automatically move to the state’s Rainy Day Fund. This revenue will be available for use in the leaner revenue years to support budgetary requirements.
The growing use of illegal drugs in society is a major concern at all levels of Maryland government. The governor is aware of the problems illegal drugs have presented within the state, and he has included in the budget $1.3 billion for mental health and substance use disorder services, as well as an additional $4 million in funding for support for Maryland citizens who are fighting heroin and opioid addiction.
Governor Hogan has once again proposed a fiscally balanced budget, one that does not raise taxes, cut services or raid special funds. Education is fully funded, and legislation has been introduced to put away possible excess funds into the Rainy Day Fund for future budgetary use. Governor Hogan has worked hard to provide for the needs of Marylanders not only for 2018 but for the years to come. I stand behind the governor’s efforts to achieve these worthy goals.