Maryland state budget

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Maryland is expected to have a $2.4 billion budget gap for FY2011, which began on July 1, 2010, and faces a gap of $1.8 billion in 2012, according to a report by the National Conference of State Legislatures.^[1] According to Federal Fund Information for States, Maryland will receive approximately $470 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[2] Gov. Martin O'Malley said the bill will provide $450 million, with $178 million of those funds going toward education.^[3]

See also: The Maryland State Budget on State Budget Solutions

[edit] State Budget for FY 2012

The state will face a roughly $1.6 billion gap between expected revenues and planned spending.^[4]

[edit] State Budget for FY 2011

Gov. Martin O'Malley said the bill will provide $450 million, with $178 million of those funds going toward education and the rest going toward the state's Medicaid costs.^[3]

On April 8, 2010, state lawmakers reached a compromise deal on a $32 billion budget.^[5]

A proposal to have counties start sharing the soaring costs of teacher pension benefits was rejected by the House.^[5] The House did, however, go along with the Senate's plan to essentially eliminate a major source of funding for local road construction and maintenance.^[5]

Gov. Martin O'Malley proposed a budget that closed a $1.9 billion shortfall in the fiscal year beginning in July, half of which would come from cuts and half through one-time transfers and other budget gimmicks, but left shortfalls projected at near-record levels of $2 billion or more annually through 2015.^[5] The budget the House and Senate conference committee agreed cuts the governor's projected deficit in 2015 from $2.2 billion to $1.5 billion.^[5]

The budget the House and Senate conference committee agreed to on April 8, 2010^[5], was approved by the House of Delegates in a 105-34 vote down party lines with only two Republicans supporting it on April 10, 2010.^[6] The budget cut the governor's projected deficit in 2015 from $2.2 billion to $1.5 billion.^[5] The governor's signature was not required for the bill to become law.^[6] The budget relies on federal stimulus money, which some law makers said would lead to tax increases the following year when the federal funds are no longer available.^[6]

Under the budget for FY2011, the state remains responsible for nearly $1 billion in teacher pension costs after a Senate proposal to shift the costs to county governments failed. The budget states that the issue will be examined by a "super blue ribbon" commission that will address state employee retirement, Medicare prescription benefits and teacher pensions.^[6]

In addition, the budget directs Gov. O'Malley to save $18 million by eliminating 500 executive branch positions; it allocates $6 million for potential state employee buyouts.^[6]

The state will spend $10.4 million on stem cell research.^[6]

The FY2011 budget leaves $195.5 million in a fund balance, which the state can use for a midyear revenue shortfall.^[6]

[edit] State Budget for FY 2010

Maryland ended FY2010 with a balance of $344 million, $183.7 million more than projected.^[7] Even though those figures represents one of the worst performances by the state in four decades, and a year-over-year decline of 3.7%, the state still outperformed expectations of financial analysts.^[8]

The state ended the fiscal year $300 million in the black, which is as much as $150 million greater than expected as the result of higher second-quarter sales tax and income tax withholding revenues. As the Baltimore Sun noted, "In the context of a $32 billion state budget, it's a relatively paltry sum."^[9] It added, "To suggest it's a surplus is like saying your checking account has a $1,000 surplus on July 30 while ignoring the $1,200 mortgage payment that's due Aug. 1. It's more like a cash flow anomaly that momentarily holds off a sea of debt."^[9]

Gov. O'Malley cut $736 million in spending for FY 2010 to balance the budget in two rounds over the summer; $282 million July 22, 2009 and $454 million on August 26, 2009. The reductions are 60% from state agencies, 29% from local aid, and 11% from employee salary and benefits.^[10] Maryland's General Fund was $13.6 billion in FY 2007 and a little below $13.2 billion for FY 2010 after the reductions. FY 2011 projections predict a $1 billion shortfall.^[11]

FY 2010 General Fund Spending Percentages after Reductions^[12]

K-12	39.2%
Health	22.2%
Rest of State Government	19.3%
Higher Education	10.2%
Public Safety	9.1%

The State of Maryland Board of Revenue Estimates (BRE) released lowered revenue estimates in September of 2009, $682.8 million lower than the March 2009 projections the FY 2010 state budget was based. The latest BRE projections anticipate FY 2010 revenues to be $12.314 billion for FY 2010 and $12.734 billion for FY 2011.^[13]

[edit] Budget Background

The Maryland General Assembly meets each year for 90 days, having convened this year from January 14 and adjourned April 13. The 2010 Session will convene on January 13, 2010.^[14]

Maryland's fiscal year begins July 1 and ends June 30 of the following year. Every year around August or September the Department of Legislative Services develops the fiscal forecast for the year in order to help create a balanced budget for the next fiscal year. In August the state's individual agencies submit budget requests and between October and November the Governor holds hearings with each agency. By the end of December the Governor completes a budget recommendation which is presented to the Legislature the 7th or 10th day of session in January. Once both the House and the Senate pass the bill, after making any necessary amendments. The Legislature gets the final say on the budget. The Governor lacks any veto authority with respect to the budget as passed. ^[15]

Created in 1945, the Board of Revenue Estimates is concerned with revenues that will fund State government (Chapter 991, Acts of 1945). The Board reviews the findings and recommendations of the Bureau of Revenue Estimates. The Board then sends to the Governor, for submission to the General Assembly, an itemized statement of estimated revenues for the current and next fiscal years. The Board has three ex officio members: the Comptroller of Maryland, the State Treasurer, and the Secretary of Budget and Management. The Director of the Bureau of Revenue Estimates, David F. Roose, serves as Executive Secretary (Code State Finance and Procurement Article, secs. 6-101, 6-102, 6-106).^[16]

[edit] Budget figures

Maryland has lowered state spending $434 million below FY 2007 levels, cut $4.3 billion, and eliminated 3,200 state positions since Gov. Martin O'Malley took office in 2007.^[17]

The following table provides a history of Maryland's expenditures and gross domestic product (GDP).

Fiscal Year	Expenditures (billions)	GDP (billions)
2000	$30.6 [18]	$180.4 [18]
2001	$33.2 [18]	$192.7 [18]
2002	$35.7 [18]	$204.1 [18]
2003	$37.1 [18]	$213.3 [18]
2004	$38.5 [18]	$228.2 [18]
2005	$41.4 [18]	$243.9 [18]
2006	$44.2 [18]	$257.6 [18]
2007	$47.3 [18]	$268.7 [18]
2008	$50.7 [18]	$280.3 [18]
2009	$54.3* [18]	$292.4* [18]

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.

[edit] 2009-2010 budget crisis

• Education funding: Maryland's 24 school boards may lose up to 5 percent of their local funding next year, as legislators debate ways to let county governments reduce levels of education spending. Sen. Ed Kasemeyer, D-Howard and Baltimore is the majority leader who is co-chairman of the workgroup on fiscal relationships. He said changing maintenance of effort rules is the only likely legislative proposal that will come out. In 2009, the state school board denied requests for waivers of the requirement from Montgomery, Prince George’s and Wicomico counties. Each jurisdiction said it had to cut funding due to reduced local revenues. The school boards have no taxing authority. The county governments provide a large chunk of funding, but they have limited say over how it is spent.^[19]
• Lower tax revenue: Maryland may generate less income tax revenue as the number of Maryland taxpayers who reported more than $1 million in personal income fell by nearly a third in 2008. The state might be losing millionaires who are moving away to avoid paying the tax that was passed in 2008, which is 6.25 percent of revenue beyond $1 million. The tax was a replacement for an unpopular tax on computer services. The tax expires after 2010 and was originally projected to raise $61 million during fiscal 2011. Ron Wineholt, vice president of government affairs for the Maryland Chamber of Commerce, said he doubts the tax will be as lucrative as projected.^[20]

[edit] 2008-2009 budget crisis

See: Maryland state budget (2008-2009)

[edit] Accounting Principles

Main article: Maryland government accounting principles

Maryland's Office of Legislative Audits (OLA) publishes its audit reports online. OLA is part of the Maryland General Assembly’s Department of Legislative Services and operates under the authority of the State Government Article, Sections 2-1217 through 2-1227 of the Annotated Code of Maryland; directed by the Legislative Auditor Bruce A. Myers. ^[21]

OLA reports to the General Assembly’s Joint Audit Committee and is responsible for:

• Performing fiscal compliance audits of State agencies to evaluate fiscal operations and determine compliance with laws and regulations
• Conducting performance audits to evaluate whether a State agency or program is operating in an economic, efficient and effective manner
• Conducting performance audits of the financial management practices of local school systems
• Operating a fraud hotline for reporting fraud, waste, and abuse of State resources
• Monitoring the financial reporting practices and financial condition of local governments in Maryland
• Conducting special reviews and investigations requested by the Joint Audit Committee

The Institute for Truth in Accounting (IFTA) rates Maryland “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Maryland’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[22] Maryland's CAFRs are published online by the Maryland State Comptroller. Maryland's FY 2007 CAFR received the Award for Excellence and "Spirit of Full Disclosure."^[23]

[edit] Budget transparency

Maryland has partial transparency, thanks to the passage of the Maryland Funding Accountability and Transparency Act. The state has made a searchable database available.^[24]

This database for Maryland Funding Accountability and Transparency is sponsored by Maryland's Department of Budget and Management.^[25] It contains information on payments to vendors who have recieved over $25,000 from the state during the fiscal year. This Website provides financial information for fiscal year 2008.

Note: the database in some cases reflects payments made to middlemen or agents, for example, the Department of Agriculture "Maryland Ag Land Preservation Foundation" payments are not available in detail. MALPF is a standalone foundation, legally, but organizationally is part of the Dept. of Ag. So searching the database for "MALPF" or its longer name is not helpful.

You have to type in "Agriculture" and then search; the list that results is not very detailed. Take the top vendor:

2008 LAW OFFICE OF HENRY I LOUIS 21201 $20,504,892.54 or maybe 2008 SAMUEL L HECK ATTORNEY 21620 $8,850,627.04

These attorneys are facilitating multiple land conservation purchases. You can't find out how much was paid to Henry Louis for services. You can't find the individual amounts paid for easements to landowners.

To get useful information requires filing a Maryland Public Information Act request. The agency may or may not cooperate.

See also: Evaluation of Maryland state website

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary	Exemption Level
MD's Funding Accountability and Transparency							$25,000

[edit] Limitations and Suggestions

This database provides useful information, but is limited in scope, and does not provide line-item expenditures (in part due to its exemption of vendors that received less than $25,000 in any given year). The expenditures it does list are limited to those made to vendors; it does not provide information on grants, or public employee salaries.^[26] Such information would prove useful for government officials, legislators, and citizens alike as they work in concert to improve the efficiency and productivity of the state.

[edit] Public employee salary information

Main article: Maryland state government salary

Although there is no public employee salary database online, the state posts information about state salaries here.

[edit] Economic Stimulus Transparency

• Maryland will receive approximately $470 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[27]

• Maryland will receive an estimated $2,586,766,501 in the first round of federal stimulus funds.^[28]

• The economic recovery website to show how legislators and government officials in Maryland are spending Federal funds is available here. The information provided is often not detailed enough for local use, and does not differentiate effectively between "allocated" amounts, contract awards, and actual spending. Furthermore, it is extremely difficult to crossreference allocation and contract information across multiple Maryland state gov't websites. In some cases, allocations have been listed for months past the point when the money was refused (see Galena, Md wastewater treatment plant loan under MDE) and in others the overall allocation has been counted in full in each county where, for example, a paving project took place.

Bids that come in under the allocation leave money that vanishes back into the state agency administering the stimulus funds. While it is supposed to be used in a similar category for a project elsewhere, there is no guarantee the project is in the same locality. As a result there can be a disconnect between reported allocations and actual spending results.

One Maryland project was noted in Senator Coburn and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. The project gave Palladian Partners Inc. of Silver Spring $363,760 to promote the good things being done with stimulus money by the National Institutes of Health.^[29]

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[30][31]

The stimulus package distributed millions of dollars to 15 Maryland Congressional Districts that do not exist, according to ARRP's website. The state has only 8 Districts.^[32]

[edit] See Also

• Maryland taxpayer-funded lobbying
• Maryland General Assembly

[edit] External links

[edit] Additional reading

• Gov. Martin O'Malley,"2010 State of the State," February 2, 2010
• Governor Martin O'Malley,"2009 State of the State," January 29,2009

[edit] References

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