Proposed State Budget – Analysis of County Effects

This initial analysis of county effects of the state budget derives from materials provided by the Department of Budget and Management. MACo and others will continue to develop further analyses as details become more clear in the days ahead.

Proposed FY 2017 Budget Actions – Overview and Local Government Summary

The FY 2017 budget as introduced by Governor Hogan totals $42.3 billion, an increase of 5% over FY 2016. The operating budget, totals $17.1 billion, a modest increase from FY 2016, and leaves a projected surplus of approximately $450 million for FY 2017. The budget also sets aside an additional $235 million in the Rainy Day Fund, bringing the balance in the fund to $1.1 billion.
The budget as proposed fully funds every mandated program, some of which benefit local governments. Direct aid to local governments totals $6.5 billion an increase of 3% over FY 2106. When retirement payments are included, total aid to local governments for FY 2017 is $7.4 billion an increase of $234,837, or 3.3%. The largest dollar increase in funding is going towards education, $140 million; and the largest percentage increase is in transportation, 18.2%, to provide capital grants to begin restoring local highway user revenues.
A summary of proposed FY 2017 budget actions affecting local governments is below.

EDUCATION – Direct aid to education totals $5.54 billion, a 1.9% increase from FY 2016. The Foundation Program, the largest education funding component, is fully funded at $3.2 billion and includes funding for the Geographic Cost of Education Index, $136.9 million. The Foundation Program also includes one-time grants of $5.6 million to three jurisdictions that have declining enrollments to provide time to better manage these declines.

TRANSPORTATION – Local Highway User Revenues are funded at $177.4 million according to the current distribution formula – Baltimore receives 7.7%, counties receive 1.5% and municipalities receive .4%. Capital transportation grants totaling $53.6 million are also being provided to begin the restoration of local HUR. Of this amount, Baltimore City will receive $5.5 million, counties $27.7 million, and municipalities $20.4 million.

LIBRARIES – The libraries are fully funded at $74 million including retirement costs, a $2.3 million or 3.2% increase over FY 2016.

COMMUNITY COLLEGES – Community colleges are fully funded through the Cade program at $234.4 million and an additional $16.6 million in unrestricted grants and special programs. With the inclusion of retirement payments, community college funding totals $314.3 million, a 6.1% increase over FY 2016.

POLICE AID – Police Aid to counties and municipalities totals $73.7 million, a 9.6% increase over FY 2016.

LOCAL HEALTH DEPARTMENTS – Core funding to local health departments totals $49.5 million, an increase of $3.8 million or 8.4%.

DISPARITY GRANT – Disparity grant funding totals $136.7 million, an increase of $6.9 million or 5.3%.

PROGRAM OPEN SPACE – Funding for Program Open Space Local totals $27.2 million. This funding level includes transfer tax revenue totaling $21.7 million in POS Local and $5.5 million for two projects in Baltimore City.

SCHOOL CONSTRUCTION – A total of $314 million is being provided for school construction – $280 million in the school construction program; $20 million for a new program for public school districts with high enrollment growth; $6 million for the Aging Schools Program; $4.6 million for federal Qualified Zone Academy Bond projects; and $3.5 million for improvements to aging non-public school facilities.

Michael Sanderson

Executive Director Maryland Association of Counties