Spending Affordability Committee Recommends Cutting Structural Deficit by at Least $350 Million

The Spending Affordability Committee (SAC), composed of members of the General Assembly and two citizen advisory members, met on December 17 to make its  fiscal policy recommendations to the Governor and General Assembly for the fiscal 2016 State budget.

With the State facing a shortfall in the current and upcoming fiscal year, the Committee recommended a reduction in the state’s structural deficit in fiscal 2016 of at least $350 million. Legislative analyst’s baseline budget projection for fiscal 2016 reflects 6.2% growth in State spending, which results in an estimated structural deficit of $700 million, increasing to almost $1.5 billion in fiscal 2020.

In addition to setting a spending limit for the fiscal 2016 budget, the Committee approved the following recommendations:

  • Maintain the balance in the Rainy Day Fund at or above 5% of estimated general fund revenue – the balance in the Rainy Day Fund is projected to be 5% at the end of fiscal 2016. Under current law, the Governor would be required to add $50 million to the Rainy Day Fund if the balance is projected to be less than 7.5% of general fund revenue.
  • Retain the General Obligation Bond issuance for fiscal 2016 at the current level of $1,095 million – The Capital Debt Affordability Committee (CDAC) recommended a maximum of $1,170 million for fiscal 2016 and an additional $300 million to be added over the next four years. SAC did not find this to be affordable.
  • Concur with CDAC’s recommendation to authorize the University System of Maryland to issue $34.5 million in new academic revenue bonds in fiscal 2016.
  • Authorize the maximum number of State positions at 81,081 for fiscal 2016 and state its intent that the Governor should use the budget and his authority to abolish and create positions to reallocate personnel resources as necessary to address service needs: and the layoffs should be avoided as sufficient opportunities for savings should exist within the existing State workforce authorization.
  • Require the Comptroller to report to the fiscal committees on the process used to track and forecast revenue collections and to identify any issues or barriers that may exist to more accurate forecasts.

Spending Affordability Committee prior reports and recommendations can be found on the General Assembly website under Publications.

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