Gov. Lawrence J. Hogan Jr. (R), Senate President Bill Ferguson (D-Baltimore City) and House Speaker Adrienne A. Jones (D-Baltimore County) announced a coordinated plan to spend more than $3.9 billion in federal stimulus funding to help Maryland’s recovery from the COVID-19 pandemic.
Hogan introduced a supplemental budget to the General Assembly which was the largest in-session change to a spending plan in recent memory. He hailed the accord as “historic.”
The governor and legislative leaders also touted the bipartisan nature of the spending plan.
“With today’s announcement, Maryland has once again shown the nation that people from different parties can still come together, that we can put the people’s priorities first, and that we can deliver real, bipartisan, common sense solutions to the serious problems that face us,” Hogan said during a brief appearance with Jones and Ferguson in the State House lobby.
Legislative leaders focused on some of the spending for pandemic-specific responses.
Ferguson highlighted more than $300 million that will be dedicated to expanding broadband in the state. He said Marylanders who felt like technology has allowed them to be able to continue work, school and social interactions without much fuss should consider themselves lucky.
“Your livelihood, opportunities for learning, and safely being able to socialize should never have been about luck, or zip code,” Ferguson said. “For far too many Marylanders, this transition has not been easy and has not been possible … because the technical infrastructure, knowledge and access was simply not available.”
Jones focused on more than $500 million that will be directed to “shovel ready” infrastructure projects that will put people back to work, including improvements to schools and recreational spaces throughout the state.
“Outdoor recreational opportunities have been a lifeline for so many during this pandemic,” Jones said. “So I’m pleased that we are funding park and playground projects in every single county in this state.”
Legislative budget committees got their first look at the proposed spending increases Wednesday afternoon.
Senate Budget and Taxation Chairman Guy J. Guzzone (D-Howard) said he thought the federal stimulus funding was smartly allocated with bipartisan agreement “to do our very best for the people who are in need now and then set ourselves up for a future of stability.”
While Hogan and legislative leaders announced plans to spend $3.9 billion, only about $2.8 billion in additional spending was included in his supplemental budget submission to the legislature. About half would be spent in the current fiscal year that ends June 30, and the other half would spent in the 2022 fiscal year.
The rest, while planned to be spent in a certain way, will be formally added to the budget later, as states wait for guidance from the federal government on additional rules and restrictions for spending the stimulus funds.
One concern of state government is whether federal stimulus money can be used to buoy the state’s depleted Unemployment Insurance Trust Fund. Hogan’s plan would allocate $1.1 billion for that purpose, though legislative analysts said that move likely hasn’t been made yet in want of federal guidance.
Another unresolved issue is whether a fluke of timing in the enactment of an Earned Income Tax Credit expansion could result in a penalty — up to more than $200 million — in the state’s stimulus award. Maryland lawmakers passed a bill expanding the credit in February but the bill was not signed by Hogan and took effect March 5 – two days after a deadline set in the federal law intended to limit the use of the stimulus to fund tax breaks.
Maryland lawmakers are awaiting guidance from the Treasury Department on whether the state will have to forfeit that funding, which is expected by mid-May.
David C. Romans, fiscal and policy coordinator for the Department of Legislative Service’s Office of Policy Analysis, said the Hogan administration may be delaying allocation of some federal stimulus funds in order to have the proper wiggle room to respond to the final rules for spending.
Sen. James C. Rosapepe (D-Prince George’s) expressed some concern about the allocation of funding for broadband, given the Biden administration’s $2 trillion infrastructure plan unveiled Wednesday, which includes more than $100 billion to improve broadband nationally.
“The money that we’re putting into broadband now, if we get more money from the federal government for broadband later this year or next year, could we swap that back out?” Rosapepe asked.
Romans said the governor would have the power to adjust funding as necessary, which could also be needed for transportation projects that are currently proposed to be stimulus-funded. Biden’s infrastructure plan proposes more than $621 billion additional federal funding for transportation projects.
House Appropriations Chairwoman Maggie L. McIntosh (D-Baltimore City) praised the supplemental budget process on Wednesday, saying it achieved one of her primary goals for this General Assembly session: to have legislative input on stimulus spending and to go into the next legislative session with replenished savings accounts and without a deficit. “This is what’s been achieved in collaboration with the governor’s office and our friends in the Senate,” McIntosh said.
The proposed additional spending will be worked into the state budget during ongoing budget negotiations between delegates and senators. The state budget as passed by the Senate came in at nearly $51 billion; with the additional spending, the final budget bill will likely total nearly $53 billion.
Here’s a quick look at some other items in the supplemental budget:
More than $800 million will be directed to cover state programs included in the RELIEF Act that passed the General Assembly on a bipartisan basis early this legislative session. The state-level stimulus program provided direct stimulus payments to low-income Marylanders, expanded the state’s Earned Income Tax Credit, slashed taxes on unemployment income and provided financial assistance to struggling businesses.
Emergency financial help
About $140 million will be used to support the state’s major welfare program, Temporary Cash Assistance, to help cover increasing caseloads. About $54 million will be used to enhance monthly benefits for people in the Temporary Cash Assistance and Temporary Disability Assistance programs through the end of 2021. $50 million is allocated to help Marylanders pay past-due utility bills.
$600 million will go to efforts to reopen schools, including $481 million to address pandemic-related costs, $80 million to improve heating and air conditioning systems over the next two years, and $46 million to address the long-term effects of learning loss.
The supplemental budget will also use federal stimulus funding for education programs, allowing the state to save $431 million for the Blueprint Fund, which is meant to support the state’s multi-billion-dollar decade-long education reform effort. That account can currently support the proposed reforms through 2026, fiscal analysts said.
Transportation and infrastructure
Hogan plans to direct $500 million to the Department of Transportation and Maryland Transportation Authority to improve services and infrastructure.
The supplemental budget restores $390 million in funding for capital projects that had been cut, including improves to the Howard Street Tunnel in Baltimore and on college campuses through the state. More than $41 million in new capital projects are added, including improvements at state government and court facilities as well as schools and recreation centers throughout the state.
Help for state workers
The supplemental budget restores — retroactively — hazard pay for state employees.
State employees who worked with individuals in quarantine — at state hospitals or prisons, for example — received an additional $5.13 per hour in the early days of the pandemic, but that increase was stopped in September. Other state employees with substantial direct contact with the public received an additional $3.13 per hour for hazard pay.
The supplemental budget will use about $100 million in federal funding to continue response pay through Dec. 31, and retroactively restoring some employees to the highest level of hazard pay.
$10 million is budgeted to help state government expand telework, and $5 million in telework grants to private businesses are available.
As COVID spread throughout Maryland, the state made efforts to release some high-risk prisoners from state facilities to avoid contagion. But many of those released had to then pay for home monitoring services during the economic downturn. The supplemental budget provides $5 million to help cover those costs.
Rainy day fund
The administration plans to use $250 million in federal stimulus funding to provide financial assistance to businesses. That money was originally intended to come from the state’s rainy day fund, which will no longer be drawn down for that purpose. After the supplemental, the state’s budget as passed by the senate would retain more than $1.35 billion in the rainy day fund, in addition to more than $700 million in unallocated general funds.
There were hundreds of other smaller changes to the budget plan, including the Hogan administration’s response to direct funding to legislative priorities included in the House and Senate draft budgets. That includes $2 million for improvements at state-owned lakes, $200 million to support services for people with autism, $3.6 million to bolster salaries for teachers at private schools for students in special education programs, and $1 million for the Maryland Stem Cell Research Fund.