Reaction to Governor’s Budget Proposal: Upbeat So Far

House Speaker Adrienne A. Jones (D-Baltimore County) and House Appropriations Chairwoman Maggie L. McIntosh (D-Baltimore City) speak with the press after attending a budget breakfast hosted by Gov. Lawrence J. Hogan Jr. (R). Photo by Danielle E. Gaines

Maryland lawmakers kicked off budget season with a bipartisan tone on Wednesday as thousands of budget books were distributed in the state capital.

At first blush, Democrats found some things to like in Republican Gov. Lawrence J. Hogan Jr.’s 2021 spending proposal.

“It’s not nearly as bad as I thought it would be, so I’m anxious to dig into it,” Senate Majority Leader Nancy J. King (D-Montgomery) said, emerging from a bipartisan budget breakfast at the governor’s mansion. “…Time will tell.”

The General Assembly’s budget committees will receive their first detailed budget briefing on Monday.

On Wednesday, though, Democrats said they were pleased to hear that Hogan’s 2021 budget proposal fully funds a $350 million mandate to implement education reform initiatives from the Kirwan Commission, sets aside a chunk of the state’s capital budget for school construction, and funds critical transportation projects including the Howard Street Tunnel in Baltimore.

“We are really pleased that there is an upfront recognition of the money that the legislature has set aside for the Blueprint for Maryland’s Future for our children,” House Appropriations Chairwoman Maggie L. McIntosh (D-Baltimore City) said, referring to the Kirwan Commission-inspired education reforms. “…In terms of transportation projects, public safety, health, the environment, so on and so forth … the devil’s in the details and we just need time to go through those details. But it’s generally a very upbeat, good budget at this point.”

Senate President Bill Ferguson (D-Baltimore City) said there are substantial areas of agreement in the proposed 2021 budget, but lawmakers have a lot of “hard conversations” ahead when it comes to getting the state to increase public education funding by billions of dollars over the next 10 years.

“We have a real opportunity to move some really big work. I think this is going to be a hard, hard year when it comes to the budget,” Ferguson said.

He added a note of optimism, though: “I think we’re going to try to find ways to collaboratively move forward.”

House Minority Leader Nicholaus R. Kipke (R-Anne Arundel) said it was refreshing to hear Democratic and Republican lawmakers sharing many of the same goals at the budget breakfast.

Why is everyone so upbeat?

“Well, it’s not an election year, so that certainly helps,” Kipke said with a smile. “But we have a real opportunity to fix some things that need fixing.”

For Kipke and other Republicans, including Hogan, the top priority this year will be funding crime-fighting initiatives in the city of Baltimore and throughout the state. When it comes to future education funding increases, Republicans will fight against any proposed tax increases and want to negotiate with Democrats to potentially scale back or phase in reforms.

The Hogan administration has lauded the budget plan as “100% structurally balanced,” though a quick analysis by the Department of Legislative Services concluded that a small structural deficit of about $37 million remains for the fiscal year.

Hogan’s proposal is balanced by a Budget Reconciliation and Financing Act, which reduces general fund spending by $530.6 million and increases revenues by $157 million. The bill cuts some previous budget language, including cost of living adjustments to some state unions, decreases to tax credit programs, a smaller increase to community service providers and a reduction in payment to the city of Annapolis for public safety costs incurred as the seat of state government.

The Budget Reconciliation and Financing Act also continues a slower phase-in of a revenue volatility cap, which generally limits how much the state budget can depend on capital gains tax revenues from Maryland’s wealthiest residents and limits how much of those taxes can be spent in a given year.

Hogan’s 2021 budget proposal also allows the bulk of $238 million in funds that the General Assembly fenced off last year for legislative priorities to revert to the general fund balance; about $16 million of those priorities are funded.

Some additional highlights from Hogan’s budget proposal:

K-12 EDUCATION

Funding for public schools in the 2021 budget totals about $7.3 billion. The proposal includes $350 million for Kirwan Commission reforms, including expansion of pre-kindergarten and concentration of poverty grants to fund support positions at schools with large populations of low-income students.

The Hogan administration has once again eschewed portions of the state’s education funding formula that would reduce appropriations for some school districts. The 2021 budget includes $9.4 million for Baltimore City and Dorchester, Garrett and Queen Anne’s counties. All counties receive an increase of at least $100,000 of state education aid in the budget plan.

The state’s capital budget includes $333.1 million for school construction. The governor and Democratic leaders have also introduced legislation to fund a multibillion-dollar multi-year school construction blitz.

HIGHER EDUCATION

The state’s colleges and universities would receive $1.69 billion in the proposed budget. Tuition increases at public colleges would be limited at 2 percent.

The state’s capital budget includes $402 million for higher education projects, including $115 million dedicated to improvements at the state’s historically black colleges and universities. Hogan’s budget does not include funding to settle a lawsuit by advocates of HBCUs, though lawmakers are expected to take up a bill to settle the case. Advocates are seeking a settlement figure around $577 million.

STATE EMPLOYEES

The budget assumes a 2% salary increase for state employees as of Jan. 1, 2021 at a cost of $53.4 million. Members of the State Law Enforcement Officers Labor Alliance would receive a 4% increase and a merit increase on July 1, 2020, at a cost of $13.8 million.

Celebrated as an example of government efficiency, Hogan’s office said the 2021 spending proposal includes about 5% fewer positions in the executive branch than in the 2015 fiscal year and that the state government workforce is the smallest it has been since 1986 and at its lowest level per capita since 1972.

PRESCRIPTION DRUG BOARD

The budget includes $750,000 for five staff positions at the newly formed Prescription Drug Affordability Board, which is tasked with evaluating expensive drugs and recommending ways to curtail costs.

TRANSPORTATION

The 2021 budget provides $1.6 billion for road and highway projects and $1.1 billion for mass transit improvements, including $167 million for Washington, D.C.-area Metro system.

Elsewhere in the suburban Washington region, the transportation capital budget includes $43 million to finish congestion mitigation along Interstate 270 in Frederick and Montgomery counties, and $35 million to develop environmental studies and public-private partnership documents for the first phase of Hogan’s proposed expansion along I-270 and the Capital Beltway.

The state’s capital budget will include a portion of the state’s $80.3 million contribution for the Howard Street Tunnel project. The tunnel project in Baltimore ― estimated to cost a total of $466 million when federal funds and a contribution from CSX are included ― will allow double-stacked containers to be moved in and out of the Port of Baltimore. The tunnel expansion will have some impact on other Baltimore transportation projects: about $5 million annually will come from the city’s highway user revenue payments through 2024.

TAX RELIEF

The budget proposes tax breaks for military retirees and public safety first responders, as well as solar energy companies. The Department of Legislative Services estimates that the proposals would result in revenue losses of $17.9 million in the 2021 fiscal year, growing to $47 million by 2025.

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Danielle E. Gaines
Danielle Gaines most recently worked for Bethesda Beat covering Montgomery County. Previously, she spent six years at The Frederick News-Post as the paper’s principal government and politics reporter for half that time, covering courts and legal affairs before that. She also reported for the now-defunct The Gazette of Politics and Business in Maryland and previously worked as a county government and education reporter at the Merced Sun-Star in California’s Central Valley.