Fiscal 2016 County Budget Outlook

As previously reported on Conduit Street, Governor Larry Hogan unveiled his first proposed budget last week aimed to resolve the FY 2015 and FY 2016 shortfalls and address the state’s structural budget deficit. The General Fund budget increases by 2.4% (or 0.5% after certain exclusions) and the largest spending reductions are to medical providers, employee compensation, school funding, and unspecified agency reductions.

The table below summarizes the Governor’s Proposed Fiscal 2016 county budget actions. Additional county-by-county details can be found in the “Supporting Local Government” section of the Budget Highlights book.

Operating Budget – Direct Aid
Education Aid Reduces funding for education by $76 million – freezes the per pupil amount at the FY 2015 level of $6,860 and delays the implementation of the phased-in change for the calculation of wealth in the education formula by one year.Geographic Cost of Education Index is cut in half – approximately $68 million
Community Colleges Reduces funding by $13 million by modifying the community college aid formula
Libraries Extends the time for phasing-in the increase in the per-resident amount from 5 to 10 years; Per-resident amount increases from $14.00 to $14.27 instead of $15.00 in FY 2016
Transportation No additional funding is provided for local transportation; FY 2015 grants for potholes ($10m to counties) and municipal roadways ($16m statewide) were discontinued
Local Health Departments Funding is being reduced to the FY 2014 level of $41.7 million for FY 2015 and FY 2016
Police Aid Funding is being reduced to the FY 2014 level of $67.3 million for FY 2015 and 2016
Disparity Grant Funding is being reduced and capped at the FY 2014 level of $127.7 million
Program Open Space Deletes a statutorily scheduled $50m repayment of Program Open Space funds diverted in past years, and redirecting some funding from the state transfer tax to the general fund, instead of POS and related programs statutorily receiving those funds
Park Lands – Payment in Lieu of Taxes Eliminates payments to counties from State Park revenues for FY 2015 and 2016
Video lottery terminal local impact grants Maintains $7.85 million (FY 2015 – $4,073,964 and FY 2016 – $3,887,697) that would otherwise be allocated as local impact grants within the Education Trust Fund

Operating Budget – Other Actions

Local Income Tax Reserve Fund Transfers $100 million from the local income tax reserve fund to the General Fund requiring the State to repay the transfer
Freeze on Mandatory Spending Freezes the education aid foundation grant in fiscal 2016 and caps growth at 1% from fiscal 2017 to 2020.

Caps funding increases for statutorily mandated programs beginning in FY 2017 to the lessor of formula growth or general fund revenue growth less 1%

Capital Budget

School Construction Public school construction totals $260.7 million in bonded projects, plus $30 million in pay-as-you-go projects
State’s Public Safety Radio System $30 million in bonds for improvements in the State’s public radio system