The Board of Revenue Estimates (BRE), composed of Comptroller Peter Franchot, State Treasurer Nancy Kopp, and Secretary of Budget and Management T. Eloise Foster, announced yesterday that revenue estimates for fiscal 2014 and 2015 are expected to decline by an estimated $253 million leaving the General Assembly in the difficult position of trying to close this shortfall.
In a briefing before the Senate Budget and Taxation Committee following the BRE announcement, the Department of Legislative Services’ Warren Deschenaux explained how this shortfall affects the State’s General Fund outlook and presented some “budget balancing options.” Based on these new projections, fiscal year 2014 and 2015 would each have a negative balance at the end of the year, $44 million and $175 million, respectively.
According to the handout, the gap that needs to be closed in the fiscal 2015 budget is $318 million. This figure takes into account the revenue write down and the actions taken by the Senate budget subcommittees so far. This figure does not include actions that will be taken up by the full committee this afternoon to offset this figure such as the transfer of the $100 million in pension reinvestment dollars to the General Fund.
Possible budget balancing options include reductions in state agencies, Medicaid, public debt, state personnel, education, and retirement investment. Reductions in education funding include reducing by 50% funds allocated for the geographic cost of education index (GCEI) and deferring the phase-in of the change in date for the net taxable income calculation by one year.
As reported by MarylandReporter.com, the Senate is seriously considering using a larger share of the pension reinvestment dollars to balance the fiscal 2015 budget.
Much or all of an annual $300 million extra payment into Maryland’s pension system is on the chopping block as Senate budgeters seek to balance Gov. Martin O’Malley’s $39 billion budget at a voting session Friday.
The governor had already used $100 million from the extra pension payment promised teachers and state employees in 2011, when their contributions into the retirement system were increased and future benefits were cut. Those actions are saving the state more than $300 million a year.
Sen. Ed Kasemeyer, chairman of the Budget and Taxation Committee, confirmed Thursday that at least $250 million will be taken from the pension payment after official revenue estimates were reduced Thursday by a combined total of $238 million for both the current fiscal year and next year’s proposed budget.