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COVID-19 in Maryland

Board Cuts $120M From Budget, Warns of Future Shortfalls Due to Virus

Among the budget cuts made by the Board of Public Works on Wednesday: $35 million from the Washington, D.C., Metro system. WTOP photo

Maryland’s top fiscal officers cut more than $120 million from this year’s state budget on Wednesday, as officials warned that the first round of trims could be less painful than cuts that will be required in the future.

The Board of Public Works unanimously agreed to the cuts on Wednesday, which included unspent money for construction projects that will still move forward in future years and unspent grant money.

However, the most recent unofficial estimate of the current year’s revenue loss is between $900 million and $1.1 billion.

There are about six weeks remaining in the state’s fiscal year, which ends June 30.

“That’s just the beginning. We’re going to have significant reductions down the road,” Comptroller Peter V.R. Franchot (D), a member of the spending panel, said. “I don’t want to leave any false hope for people that this is going to be a minor bit of surgery. It’s a new fiscal reality that we’re going to have for the next couple of years.”

Maryland Budget Secretary David R. Brinkley cautioned that despite Wednesday’s cuts and actions already taken by the Hogan administration ― including agency budget and hiring freezes ― “we still do have a long way to go.”

At a Board of Revenue Estimates briefing last week, estimates on potential revenue losses in fiscal year 2021 were between $2.1 billion and $2.6 billion.

The administration’s general strategy to close the potential gap for this year is to harness general funds that have been set aside for capital projects and which have not yet been spent, Brinkley said.

Among the cuts that were approved on Wednesday were $62 million for construction projects at the University of Maryland Eastern Shore pharmacy school and at the University System of Maryland center in St. Mary’s County. Both projects are moving forward, but do not require the funding this fiscal year, Brinkley said.

The cut also includes $35 million in state funding for the Washington Metro system, which is being withheld pending the outcome of a financial audit.

The remainder of the cuts ― $23.6 million ― were to state grants that weren’t applied for during the fiscal year.

Brinkley said it “remains to be seen” whether additional budget cuts are needed this fiscal year.

Deputy Budget Secretary Marc Nicole said the state expects about $300 million to $350 million in savings at the end of the fiscal year, a figure mostly bolstered by recent federal stimulus money.

Beyond that, the state will use a portion of its $1.2 billion-plus rainy day fund to balance the budget for 2020, officials said.

“Hopefully the numbers are better so we don’t need to use as much, or hopefully any of the rainy day fund,” Nicole said. “Because we certainly … will need to use it a lot to balance the fiscal 2021 budget.”

State Treasurer Nancy K. Kopp (D) commended the precision of the proposed cuts on Wednesday and said she wanted state leaders to look at “the whole range” of options for balancing the state’s future budgets in addition to pure cuts.

“It’s a very, very difficult process,” Kopp said. “…What we should not be doing now is putting more people out of work or cutting necessary services to our citizens.”

Lt. Gov. Boyd K. Rutherford (R), who has been serving as chair of the Board of Public Works since taking over non-coronavirus state functions from Gov. Lawrence J. Hogan Jr. (R) in March, said all of Maryland’s elected officials “will inevitably have to make some tough choices” financially in the coming years.

“We may not be able to everything that we want to do, or fund everything that we want to fund right now,” he said. “We do have a fiduciary responsibility to all Marylanders to be responsible not only to them, but to future generations and to operate within our means and to have, I’ll say, the political courage and will to make those tough decisions that are going to need to be made.”

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Board Cuts $120M From Budget, Warns of Future Shortfalls Due to Virus