Governor Hogan will be proposing to cut $83.3 million from the FY 2017 state budget at the November 2, 2016 Board of Public Works (BPW) meeting, according to the notice posted today on the Department of Budget and Management’s website. The cuts include $3.9 million for local government disparity grants. Local jurisdictions that experienced an increase in Fiscal 2017 would have that increase reduced by 50 percent.
Local Effects: Disparity Grants and Community Legacy
The $3.9 million reduction in disparity grants would affect four counties, with the lion’s share (roughly $3.5 million) in Prince George’s County. The remainder is split among Wicomico ($280,000), Washington County ($91,000), and Cecil ($8,000). These MACo figures are drawn from the brief description in the BPW agenda item, and the DLS Budget Analysis for the FY 2017 disparity grant.
Disparity grants were first instituted in 1992 (and altered numerous times since) to assist jurisdictions that generate substantially less from local income taxes than the state average. It was established in conjunction with a variety of state aid cutbacks affecting counties, offset at the time with increased county income tax authority.
The Community Legacy Grant Program is also slated for a $1 million reduction. The Community Legacy program provides local governments and community development organizations with funding for essential projects aimed at strengthening communities through activities such as business retention and attraction, encouraging homeownership and commercial revitalization.
Other State Cuts and Shifts
The largest overall effect is $20.8 million to the Department of Health and Mental Hygiene, which mainly represents a shift to reduce General Fund spending to reflect additions to the Cigarette Restitution Fund, and scales back the Kidney Disease Treatment Program spending to reflect the three-year historical average of spending. The University System of Maryland also receives significant cuts of $11.5 million by eliminating 41 filled positions and 60 vacant positions.