Uncertainty As Large State Structural Deficit Looms

The State budget faces a structural deficit that grows to over a billion dollars in just four years. It is unclear how State officials will close that gap in fiscal 2019 or beyond. 

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Last December in acknowledgement of “slower than anticipated economic growth” resulting in a state structural deficit totaling $377 million in fiscal 2018 and $1.2 billion in fiscal 2022, the state’s Spending Affordability Committee (SAC) recommended that the fiscal 2018 budget reduce the structural deficit by 50 percent.

It did.  It did not go quite as far as the Governor’s proposed budget, which would have addressed 100 percent of the fiscal 2018 structural deficit of $377 million with an estimated $47.0 million in structural surplus. But the General Assembly’s budget still went significantly farther than the SAC’s recommendations, reducing the deficit by $331 million, or 88 percent.

The Committee also recommended that the Administration:

…prepare a detailed report with specific proposals for achieving structural balance in fiscal 2019. The report should specify actions to the program level. The report should be submitted to the Spending Affordability Committee, the House Appropriations Committee, and the Senate Budget and Taxation Committee no later than July 1, 2017.

The Spending Affordability Committee only makes recommendations, which do not carry the force of law. The General Assembly passed budget language requiring the Department of Budget and Management complete the report by July 1, 2017.

The Baltimore Business Journal reports that the Administration has declined to provide the report. The coverage quotes a letter sent by Department Secretary David Brinkley:

…The Department of Budget and Management would like to advise you that the administration’s response to your request will be submitted as part of the fiscal year 2019 budget proposal on Wednesday, Jan. 17, 2018. … We believe that the July 1 deadline for the submission of this report conflicts with the executive budget process established under Maryland’s constitution.