Supercommittee Failure Creates State Budget Fallout

Although the bulk of the $1.2 trillion in reductions triggered by the inaction of the Congressional Supercommittee would take effect in State fiscal year 2014, some reductions may take effect in fiscal year 2013, forcing states to consider these reductions as they prepare budgets for the upcoming fiscal year.  Maryland and Virgina, with such a reliance on defense spending, may also need to consider lost tax revenues resulting from contract cancellations or staff reductions.  As reported by the Washington Post, both states will be grappling with these issues and their ramifications in the months ahead.

Lawmakers in Annapolis and in Richmond began meeting in recent days to grapple with the potential effects: State budgets that are required to be approved next spring, and that will take effect in July, will overlap with the federal budget that is scheduled to contain the deep cuts.

The annual reductions in Maryland are estimated to range from $135 million to $158 million.  Warren Deschanaux, Director of Policy Analysis, from the Department of Legislative Services, discussed these reductions during a Spending Affordability Committee briefing on November 17, 2011.

Deschenaux said a significant amount of the planned automatic reductions occur to programs that fund local governments or go directly to individuals for assistance.

Maryland’s education department could be hit hardest, with $62 million in cuts to special education, school meals and other programs by 2014.

Among the many other areas that could face cuts: low-income home heating assistance, child support enforcement, HIV Care Formula grants, Section 8 housing assistance payments and vouchers, and social services block grants.

Combined, the annual cuts in Maryland could range from $135 million to $158 million.

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