State Budget Outlook: The Sky’s Staying Put

Maryland’s budget shortfall is much lower than expected, learned members of the General Assembly’s Spending Affordability and budget committees yesterday from Warren Deschenaux, executive director of the Department of Legislative Services. Deschenaux, in his final presentation to a group of this size before his pending retirement, said the anticipated fiscal 2019 budget gap of $740 million is now $250 million. This results from favorable bond premiums, lower state employee health care costs due to vacancies and a reduction in Medicaid obligations.

He advised the General Assembly members to take a hard look at Maryland’s sales tax system. Sales tax revenues have fallen for some time due to boosted popularity of e-commerce, and a general transition from spending on goods to services.

From The Washington Post:

“The outlook is better than I expected it to be,” Deschenaux said.

To cover the smaller shortfall, he suggested that the General Assembly consider “freezing everything at current levels” except for mandated spending such as K-12 education and reimbursements for care providers who work with the disabled.

While the news was rosier than in previous years, analysts noted that the forecast did not include the devastating impact that federal changes to health care or the tax code could have on state revenue.

Helpful Links

Briefing document

Coverage by The Washington Post