Budget Committees Hold Fiscal Briefing on Governor’s Proposed Budget

As previously reported on Conduit Street, the Governor released his FY 2013 budget last week.  This budget proposal shifts $239  million of teacher pension costs to the counties and flat funds many other local programs.

On January 23, the Department of Legislative Services briefed the members of the Senate Budget and Taxation and House Appropriations Committees on the steps being taken to balance the FY 2013 budget.  In general, the budget plan is closing a gap of almost $1.5 billion which can be attributed to a structural gap of $1.1 billion; additional one-time spending to repay a previous transfer of transfer tax revenues to the general fund and increase the rainy day fund balance; and general fund deficiencies.  To close this gap, the budget relies on a general fund balance of $534 million; constrained budget growth of $615 million, which includes the flat funding of local programs and the teacher pension shift; increased revenues of $404 million; and transfers to the general fund totaling $104 million. (This is described in much more detail in the fiscal briefing document.)

The analysis also provides an overview of State aid to local governmentsPage 31 of the briefing document shows the net effect of State aid reductions and local revenue enhancements on each funding category.

  • Public schools – funding increases by $113.2 million and the Local Education Agencies are relieved from paying retirement payment for federally funded teachers – Total effect – $150.3 milion
  • Local libraries – funding increases by $0.9 million
  • Community college – under current law funding would have increased by $5.7 million, but contingent reductions in the Budget Reconciliation and Financing Act of 2012 (BRFA) reduce this figure by $2.5 million – Total effect – $3.2 million
  • Local health departments – under current law funding would have increased by $0.9 million, but language in BRFA flat funds health departments at the base funding level of $37.3 million – Total effect – a reduction of $1.0
  • County/Municipal – under current law, funding would have increased by $66.2 million, but language in the BRFA to reduce police aid, a Baltimore City Grant, horse racing impact grants, and shift teacher pension costs reduces funding by $264.5 million;  an increase in the disparity grant and revenue enhancements offset this reduction by $187.3 million – Total effect $8.6 million

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