Schools, Economic Recovery Dominate Hogan’s Budget Proposal

Governor Larry Hogan today previewed his fiscal 2022 spending plan, which he said provides immediate tax and economic relief to families and businesses in need, makes record investments in top priorities, and lays a fiscally responsible foundation for a strong recovery.

Among the highlights of the governor’s proposal, $7.5 billion for K-12 education, $833 million in school construction funding, $1 billion in direct stimulus and tax relief through the recently announced RELIEF Act, more than $1 billion for roads and highways, and $964 million for mass transit improvements. The governor also announced $213.7 million in hold-harmless education grants to address fluctuations in school enrollment amid the pandemic.

Governor Hogan stressed that his budget — which he will formally introduce tomorrow, in accordance with State law — is structurally balanced and limits spending growth without raising taxes, cutting services, or implementing furloughs and layoffs for state employees.

“We look forward to working together with the House and the Senate in a bipartisan and collaborative fashion to enact a final budget,” said Governor Hogan. “This economic recovery budget and the RELIEF Act of 2021, with all of its immediate tax and stimulus relief, are far and away the most important things that the legislature must address right now as we continue our work to prevent more illnesses and deaths, to get our kids back in school, to mitigate the damage to our economy, and to bring about a robust health and economic recovery and eliminate and eradicate this pandemic.”

According to the budget preview:

Record Education Funding

  • Governor Hogan’s budget provides a record $7.5 billion for K-12 education, above and beyond the legislature’s funding formulas.
  • For the sixth consecutive year, Governor Hogan’s education budget exceeds statutory funding formulas to ensure that every jurisdiction receives more direct education aid than in the prior year. In FY 2022, $213.7 million is provided in hold-harmless grants to ensure every jurisdiction receives more direct aid than in FY 2021 regardless of fluctuations in enrollment.
  • The FY 2022 budget includes $375 million in funding to support the third year of the “Hogan Lockbox” to ensure that Video Lottery Terminal revenue supplements education funding consistent with the constitutional amendment passed by Maryland voters.
  • The FY 2022 budget includes $151 million to continue a successful tutoring program implemented in FY 2021 to assist students most at risk of learning loss.
  • The FY 2022 budget also includes $53 million to expand full-day pre-Kindergarten for every 4-year-old in the state, and $10 million to expand the highly successful Broadening Options and Opportunities for Students Today (BOOST) program, which provides scholarships for some students who are eligible for the free or reduced-price lunch program to attend eligible nonpublic schools.
  • The FY 2022 capital budget includes a record $833 million for school construction projects in every jurisdiction, including the first year of an initiative to invest $3.6 billion in school construction over the next five years.
  • The FY 2022 budget makes record investments in the community college network across Maryland. Under the Hogan administration, funding per student at the community colleges has grown by 57%.
  • For the sixth year in a row, tuition growth at state colleges and universities will be limited to 2%.

Tax and Stimulus Relief for Marylanders

  • This budget aims to stimulate Maryland’s economy with the implementation of Governor Hogan’s recently announced $1 billion RELIEF Act, an emergency legislative package that will provide more than $1 billion in direct stimulus and tax relief for Maryland working families, small businesses, and those who have lost their jobs as a result of the COVID-19 pandemic.
  • To address the state’s sky-high retirement taxes, the governor’s budget calls for a major $1 billion tax cut for all Maryland retirees.
  • The governor’s budget calls for expanding the Hometown Heroes Tax Credit, to exempt law enforcement, fire and rescue, corrections, and emergency response personnel from state tax on all retirement income specific to their service. It also calls for increasing the tax exemption for all military retiree pensions.

Protecting Our Communities

  • In the FY 2022 budget, police aid to local governments is funded at $74.6 million and local law enforcement grants are funded at $43.7 million—including $3 million to protect Marylanders against hate crimes.
  • The FY 2022 budget provides an additional $5 million for the third year of the governor’s Baltimore City crime prevention initiative.
  • The FY 2022 budget includes nearly $250 million for community and residential operations to provide direct care services to youth under the Department of Juvenile Services’ supervision.
  • The budget also includes $9.6 million to reflect savings realized since the enactment of the Justice Reinvestment Act to continue to research evidence-based strategies to decrease crime and reduce recidivism. This record level of funding is double the amount provided in FY 2021.

Protecting Public Health

  • Governor Hogan’s budget ensures that Maryland’s most vulnerable citizens have access to critical healthcare services. The FY 2022 budget includes:
    • Nearly $13.5 billion for Maryland’s Medicaid program—providing health coverage to over 1.5 million Marylanders, including more than 143,000 children through the Maryland Children’s Health Program;
    • More than $1.4 billion in support for developmental disabilities community services (a growth rate of 4% over FY 2021), including an additional $25.6 million to expand services.
    • $124 million to fund provider rate increases in the fields of behavioral health, developmental disabilities, and other healthcare services, including more than $41 million to implement the rate increase six months early on January 1, 2021.
  • The governor’s budget includes nearly $62 million to fully fund the local health grant formula, along with a new block grant program to increase funding for local health departments. Under the Hogan administration, funding for local health departments has grown by 43%.
  • The governor’s budget includes more than $1.8 million to expand the Program of All-Inclusive Care for the Elderly (PACE) that allows seniors to remain in home and community-based settings.

Fighting the Opioid Epidemic and Substance Use Disorders

  • In order to combat the ongoing, silent epidemic of opioid abuse and other substance use disorders, the Hogan administration has once again provided record funding—$978 million—for substance abuse treatment. Spending in this area has increased 562% since FY 2016.
  • The governor’s budget includes $296 million for substance use disorder services—a $35 million increase over FY 2021—and $231.8 million for mental health and substance use disorder treatment for uninsured Marylanders, another record-high investment.
  • The governor’s budget includes more than $10 million to fund the activities of the Opioid Operational Command Center, marking the fifth annual installment of funding and a total investment of more than $50 million.

Protecting Our Environment

  • For the sixth consecutive year, the Hogan administration has fully funded Chesapeake Bay restoration efforts and ensured that all state environmental protection programs funded by the transfer tax are fully funded as well.
  • The FY 2022 budget includes $48.8 million to fully fund the Chesapeake and Atlantic Coastal Bays Trust Fund, which supports critical bay restoration activities and implementation of best management practices.
  • Almost $43 million supports renewable and clean energy programs and another $14 million in the governor’s budget is dedicated to energy efficiency.
  • The governor’s budget commits $4 million to extend the currently expired zero emissions vehicle tax credit.

A Balanced Approach to Infrastructure 

  • Highlights of the capital transportation budget include more than $1 billion for roads and highways and $964 million for mass transit improvements, including $167 million in dedicated funding for the Washington Metropolitan Area Transit Authority and $21.5 million for the Howard Street Rail Tunnel improvements, the first year of a three-year commitment.

Maintaining Fiscal Responsibility

  • For the seventh consecutive year, the governor’s budget is structurally balanced. It limits spending growth without raising taxes, cutting services, or implementing furloughs and layoffs for hardworking state employees.
  • The governor’s budget maintains minimal reserves consistent with the legislature’s spending affordability guidelines to help maintain the state’s coveted AAA bond rating.

Stay tuned to Conduit Street for more information.

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