Despite Budget Surplus, Structural Deficit Looms in Out-Years

As reported by MarylandReporter, the State’s structural deficit, although closed for this current fiscal year and next, will recur again in two years.

On Friday, the legislature’s top nonpartisan staffer told legislative leaders in a letter that structural deficits are forecast to recur again in two years, growing from $37 million in fiscal 2018 to $465 million in fiscal 2021.

“While it cannot be said that the structural deficit is no longer a concern, our most recent forecast suggests that it can be addressed without extraordinary measures through prudent budget management over the next few years,” said Warren Deschenaux, executive director of the Department of Legislative Services.

The structural deficit is the difference between estimated future revenues and baseline expenditures.

These baseline budgets assume full funding of all the programs mandated by state law such as education aid, the largest single state-funded program, and Medicaid health insurance, as well as cost-of-living increases and the pension contributions for state employees. It also includes inflation in costs for utilities, gasoline, food and supplies.

The recurring structural deficit is Governor Hogan’s justification for not releasing additional education funds that have been set aside in the fiscal 2016 budget. As previously reported on Conduit Street, democratic leaders in the General Assembly are urging the Governor to release the $68 million set aside in the fiscal 2016 budget now that the budget surplus is greater than expected.

To learn more about budget issues confronting the Governor and General Assembly during the upcoming 2016 session, attend the MACo Winter Conference session “2016 General Assembly Forecast.”

Description: The upcoming session appears to be a challenging one for officials in Annapolis. Revenues are up for the coming fiscal year, but competing ideas on how the funds should be used may trigger disagreements. At the same time, the increasing cost of school construction, the growing concern over public safety issues and improving the state’s business climate warrants public and political attention. The General Assembly’s two presiding officers, the House and Senate minority leaders, and a policy advocate from the Administration will share their views on the issues confronting Annapolis for 2016 and beyond.

Speakers:

  • The Honorable Michael E. Busch, Speaker, Maryland House of Delegates
  • The Honorable Edward J. Kasemeyer, Maryland Senate
  • The Honorable J.B. Jennings, Minority Leader, Maryland Senate
  • Joseph M. Getty, Chief Legislative Officer, Governor Hogan’s Administration

Moderator: The Honorable John F. Barr, MACo Incoming President, Washington County Commissioner

Date/Time: Friday, December 11, 2015; 9:30 am – 10:45 am

Learn more about MACo’s Winter Conference:

Questions? Contact Meetings & Events Director Virginia White.

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