Hogan’s Budget Draws Mixed Reactions

In his announcement releasing his fiscal 2018 budget, Governor Larry Hogan touted that it “responsibly holds the line on spending, provides record investment in education, and allocates $1 billion in reserves.” From the press release:

The administration’s proposed budget is 100 percent structurally-balanced and immediately addresses current revenue volatility the state has experienced, while positioning the state to remedy future revenue shortfalls by spending less in General Funds in FY 2018 than in FY 2017.

However, others have not responded so optimistically. The Washington Post reports in its article, Critics: Gov. Larry Hogan’s budget won’t be painless after all:

On Wednesday, [Governor Hogan] released his actual budget proposal for fiscal 2018, triggering immediate criticism from advocacy groups and Democratic lawmakers about cuts to some mandated spending increases, a reduction in the operating subsidy provided to Prince George’s Hospital Center, the elimination of some funding to address pressing problems in Baltimore; and a reduction in spending on state grants to that city and other poorer jurisdictions that receive relatively little revenue from income taxes.

“This is a reminder that when something sounds too good to be true, it probably is,” said Sen. Richard S. Madaleno Jr. (D-Montgomery), vice chair of the Senate Budget and Taxation Committee. “You can’t believe all the hype that comes out of the governor’s press operation.”

Much of the pushback related to legislation that the governor is proposing to keep spending in check amid dimming revenue forecasts. The measure, known as a budget-reconciliation bill, would pause some of the state’s mandated spending, including many funding hikes that take place automatically each year under state law….

Overall spending on local aid would remain relatively flat under Hogan’s fiscal plan, increasing by only $1 million in 2018.

The Baltimore Sun reports:

Faced with a half-billion-dollar budget gap, Gov. Larry Hogan is proposing to roll back several programs enacted to help Baltimore recover from the riots of 2015 and to freeze pay for state workers.

The Republican governor would also downsize a major state prison in Hagerstown, delay money for a long-desired hospital in Prince George’s County and reduce extra payments into the state’s pension system. …

Lawmakers from Baltimore bristled at the loss of $32 million in new programs to extend hours at branches of the Enoch Pratt Free Library, bolster neighborhood association construction projects, help retain city teachers, attract new development and send underprivileged students to college. …

A spokesman for Hogan said the governor eliminated funding for new spending mandates, which included measures enacted last year. He said the legislature was welcome to find another way to pay for existing state services.

“The governor had a budget reality he had to face: you can’t spend money you don’t have,” spokesman Doug Mayer said.

Labor groups have expressed displeasure with the elimination of cost-of-living increases for state workers:

In The Sun’s editorial, Hogan balances his budget on Baltimore’s back:

Mayor Catherine Pugh, Del. Maggie McIntosh, Sen. Bill Ferguson and House Speaker Michael E. Busch might dispute the governor’s claim that he cut “almost nothing.” In fact, he decimated the package of aid they and others put together last year to help Baltimore recover from the 2015 unrest. Mr. Hogan is, among other things, proposing to cut $8 million in incentives for teachers to work in the most challenging schools, $5 million for scholarships, $7.5 million for after-school programs, $5 million for a program to help anchor institutions like universities foster community development, $9 million from the Baltimore Regional Neighborhood Initiative Program Fund and $3 million to help keep city library branches open longer.

Meanwhile, although Mr. Hogan can rightly claim that K-12 education spending overall is at its highest level ever, direct state aid to Baltimore City schools is set to decline by $42 million at a time when the district is already facing a severe projected budget shortfall. Most of the reduction is due to a small decline in enrollment, but Mr. Hogan has provided extra funds in the past for jurisdictions in that situation. …

We … applaud him for taking up the idea of limiting the amount of extraordinary revenue that can be used to pay for ongoing expenses. Maryland has suffered from volatility in its revenues in recent years related mainly to capital gains taxes. Though the details of his proposal will be crucial, the concept is sound. We are less optimistic about his proposed reform to prevent mandated spending from growing faster than state revenues. Though it is a problem worth addressing, we favor a systematic review of the costs and benefits of the mandates enshrined in state law rather than the blanket relief Mr. Hogan is suggesting.

Governor Hogan refutes the editorial on his Facebook page, emphasizing that his budget extends significant aid to Baltimore City.

Meanwhile, state legislators have already expressed mixed responses:

In the post, Budget, First Look: Counties To Fund Most Of SDAT; Most Formulas Capped, MACo points out that the budget makes counties responsible for nearly all operating costs for the assessment and directorial functions of the State Department of Assessments and Taxation (SDAT) – 70 percent in fiscal 2018, and 90 percent for every year thereafter. Additionally, all county (and other) aid requirements, except those for education, are capped at one percent less than projected General Fund growth. Read more here.