State foresees shortfall of $800 million, hampering spending and tax relief
State budget makers will head into deliberations on next year’s spending plans with $800 million less than they had expected after the state Board of Revenue Estimates’ projections were released Wednesday, putting a damper on the prospects for increased spending or significant tax relief.
State budget makers will head into deliberations on next year’s spending plans with about $800 million less than they had previously expected, after revenue estimates were cut Wednesday.
The revised projections released by the state Board of Revenue Estimates put a damper on the prospects for more spending or significant tax relief as Republican Gov. Larry Hogan heads into his third General Assembly session in January.
The numbers set off a new round of partisan recriminations and finger-pointing, with the Hogan administration blaming Democrats, and Democrats accusing the administration of playing a blame game.
“Let’s be clear: Maryland doesn’t have a revenue problem,” Hogan spokeswoman Amelia Chasse said. “Certain members of the General Assembly have a spending problem.”
State Sen. Richard S. Madaleno Jr., vice chairman of the Senate’s Budget and Taxation Committee, said Hogan is refusing to take responsibility for declining revenue on his watch.
“He inherited a growing economy and has steered it in a different direction,” the Montgomery County Democrat said.
Comptroller Peter Franchot, who chairs the Board of Revenue Estimates, said the writedown “reflects the stagnation of our economy.” He emphasized a need for fiscal caution on spending, borrowing and taxes.
“It’s a tough scenario, but we can get through this if we all work together in partnership,” said Franchot, a Democrat who has closely allied himself with the Republican Hogan on fiscal issues.
He said the new projections likely mean tax relief will be “off the table” next year.
“Pragmatically, it won’t happen, given these developments,” the comptroller said.
State revenue officials estimate that Maryland will collect $365 million less than expected in the current budget year and $417 million less for the budget lawmakers will consider during the 90-day General Assembly session next year.
Together with a previously reported $250 million shortfall for the budget year that ended June 30, the state faces a more than $1 billion revenue gap for the threeyear period.
The shortfall going into next year’s budget could be alleviated partially if the Board of Public Works decides to trim spending for the current year.
Andrew M. Schaufele, executive secretary of the revenue board, told members the weak tax collections largely reflected a slow recovery and sluggish gains in Marylanders’ earnings despite improving employment numbers. He said the jobs Maryland’s economy has been gaining lately have disproportionately been low-paying, temporary positions.
Budget Secretary David R. Brinkley said the numbers underscore the need for one of Hogan’s top priorities: relief from the minimum spending requirements the legislature has written into state law.
Hogan’s office said the new numbers are a “stark reminder” that the state will continue to have budget problems as long as the legislature’s Democratic majority balks at adopting “meaningful spending reforms.”
Madaleno dismissed the idea that easing spending mandates would solve the state’s budget challenges. “When the administration talks about mandate relief, what a Marylander should hear is ‘we want to cut education and health care,’ ” he said.
If the governor wants to spend less than the amounts mandated for programs next year, he would have to ask the legislature’s permission through a budget reconciliation act. But the numbers set the stage more for confrontation than reconciliation.
Chasse urged lawmakers to join in a “common-sense approach to spending.”
“From day one, Governor Hogan has worked to rein in spending and enact fiscally responsible measures to put Maryland on a secure path, and to this day his efforts have been fought tooth and nail at every turn,” she said.
But Democrats in the legislature pointed to figures showing that the current year’s budget was projected to be $363 million in the black when they left Annapolis in April. Now, it’s forecast to be $28 million in the red.
“To say the legislature is the problem is just wrong,” said Del. Maggie McIntosh, who chairs the House Appropriations Committee. She said lawmakers have had no impact on the budget since the session. “This is what the governor does — blame somebody else and never take responsibility,” the Baltimore Democrat said.
McIntosh also expressed scorn for Franchot, whom she described as Hogan’s “little sidekick.”
She said “the new Republican comptroller” hasn’t gotten revenue projections right for three out of the last five years.