In Montgomery, Officials Talk Federal Stimulus, Revenues, and Education Reform Veto

At a Committee for Montgomery virtual discussion Tuesday, Maryland Treasurer Nancy K. Kopp (D) and Comptroller Peter V.R. Franchot (D) said state and local revenues are holding up during the coronavirus-fueled recession, but federal stimulus funds are needed to fortify budgets into the future. Photos by Danielle E. Gaines.

State and local officials say the economic hit brought on the pandemic might not be as bad as originally expected ― so long as the federal government doles out stimulus money later this year.

But although revenue shortfalls might not be as bad as originally anticipated, a strong second wave of COVID-19 or a stalled federal stimulus package could put state and local governments in a “catastrophic” situation, Comptroller Peter V.R. Franchot (D) warned during a virtual discussion with Committee for Montgomery on Tuesday night.

He warned that any estimate as to what revenues will look like over the next year are “thrown into a cocked hat,” since those estimates assume there will be another stimulus. The latest talks of a stimulus have stalled in Congress as Republicans and Democrats disagree over what the next round of relief funding should look like.

“We are facing a catastrophic situation, should there not be a second stimulus,” Franchot said. “I have my fingers and toes crossed.”

In the meantime, Franchot and Treasurer Nancy K. Kopp (D) are at odds over what to do with the state’s general fund surplus. Franchot revived his calls to give the $585 million surplus to small businesses during the online discussion, but Kopp said the state shouldn’t give away the money in the midst of an already volatile situation.

“We cannot sit on this money,” Franchot said. “This money needs to go out the door immediately”

Kopp warned that, if a federal stimulus fails, thousands of unemployed Marylanders may need to lean on the state for relief. She said there are too many unknowns to spend the $585 million at one fell swoop.

“You have to have a measured response and look at the whole economy,” Kopp said. “To do it indirectly as a stimulus you have to be very careful.”

Del. Marc Korman (D-Montgomery) said he supports aid for small businesses, but said education and infrastructure revenues have plummeted in the midst of the pandemic as well. He and Sen. Craig Zucker (D-Montgomery) both said legislators should focus on funding education, and said they hope to override Gov. Lawrence J. Hogan’s veto on a sweeping education reform during the next session.

The proposed Kirwan Commission reforms would have increased the state’s annual education spending by roughly $4 billion over ten years, including about $1.2 billion annually paid by local governments. The governor cited the economic shortfalls brought on by the coronavirus pandemic in rejecting the bill, which was one of dozens that Hogan vetoed earlier this year.

Franchot, however, said overriding the governor’s Kirwan veto would be a mistake. He said he doesn’t take issue with the sweeping reforms in the bill, but urged lawmakers to revisit the plan instead of pushing it through during the next session.

“To go forward with Kirwan in the face of the pandemic… would be an unbelievable example of just excruciatingly bad timing,” Franchot said.

Montgomery County’s economic outlook has improved as well, said the county’s recently appointed Chief Administrative Officer and former legislator Richard S. Madaleno Jr. He said that, unlike in the 2008 housing crisis, property taxes and sales have remained relatively strong in the county.

Madaleno added that he’s “cautiously optimistic” about the county’s 2021 revenues, although he said another shutdown or a strong second wave of COVID-19 could worsen that outlook.

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