Estimated $1.6 Billion Budget Gap for Fiscal 2012

Analysts from the Department of Legislative Services (DLS) informed members of the Spending Affordability Committee, Senate Budget and Taxation Committee, and the House Appropriations and Ways and Means Committees that the State is facing an estimated $1.6 billion shortfall for fiscal year 2012.  The briefing document can be found on the General Assembly’s website.  The biggest drivers of the shortfall are increasing medical assistance costs  and elimination of federal stimulus dollars used to fund education programs and teacher retirement payments. Offering a glimmer of hope, Warren Deschenaux, director of policy analysis at DLS, stated that this number could get smaller if December revenue estimates show improvement.

Megan Poinski of summarizes other aspects of the budget.

The state is stretched thin in most other places as well. In the current fiscal year, more than a third of the total revenues from general obligation bonds have been programmed for specific items in the operating budget. These funds are filling gaps, including nearly $177 million to replenish fund balances in several capital program accounts and $102 million to replace shortages in revenues – as in transfer taxes. Also, almost $44 million has gone to capital programs that traditionally run out of the General Fund.Bond money availability does not get better. For the coming fiscal year, most of the bond funds is already obligated, with only about a quarter of it — around $239 million – available for other uses.

Analyst Dylan Baker looked at executive department positions and found that the state has already cut its personnel budget appropriately. About 93% of all full-time positions are filled. Of the 7% that are empty, most of the positions have been frozen or eliminated through attrition; there are only 122 job vacancies actually funded in the budget.

And while new revenues from slot machine gambling are expected to add more than $1 billion to the budget by 2015, that money is growing relatively slowly. With just two of the five permitted facilities slated to be in operation this fiscal year, the state is looking to take in only $132 million this year. The figures assume that the Anne Arundel casino will not be in operation until November 2012, a Baltimore City casino will open in July 2013, and there are no revenues projected at all from the Rocky Gap casino, which has received no bids to date.

Leaders from both parties said that it is time to take some action. However, with a pledge from Gov. Martin O’Malley and legislative leaders not to raise taxes in 2011, what will be done remains unclear.

“It is going to be very, very difficult to come up with $2 billion in cuts,” said Senate President Mike Miller.

House Minority Leader Anthony O’Donnell said his caucus will look for new ways and new ideas to reduce spending.

“We are going to continue to preach fiscal discipline in this state devoid of fiscal discipline,” he said.

Additional coverage can be found at the links below.
Baltimore Sun
Washington Post


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