Governor Larry Hogan this week released a five-point framework for spending a $2.5 billion budget surplus.
The massive fund balance — the result of much larger-than-expected revenue growth, primarily driven by an influx of federal stimulus funding, as well as a significant uptick in personal and business income and consumer spending — is the largest in state history.
The five-point plan includes bolstering the state’s rainy-day fund, tax relief for retirees and working families, enhancing Supplemental Nutrition Assistance Program (SNAP) benefits for low-income beneficiaries, and a potential boost in compensation/benefits for state employees.
According to Governor Hogan’s press release:
The governor’s five-point plan to invest Maryland’s record surplus includes:
Increasing the Rainy Day Fund. The governor’s plan will bolster and increase the state’s Rainy Day Fund to at least 7.5%, or $1.67 billion, in order to have extra revenue available for potential recessions and future crises.
Major Tax Relief for Retirees. The governor will again seek to address the crippling tax burden on retirees, which continues to hurt Maryland’s ability to compete effectively with other states. The Hogan administration has introduced legislation each year to provide this much-needed relief, but the legislature has failed to take action.
Direct Tax Relief for Marylanders. Governor Hogan’s plan includes additional direct tax relief for working families across the state. This would build on the success of the RELIEF Act of 2021, which included the largest tax cut in state history.
Additional Relief for Underserved Marylanders. As the state continues to recover from the COVID-19 emergency, Governor Hogan announced his intention to continue to provide additional targeted relief for Marylanders who are struggling to make ends meet.
The State of Maryland has already sent more than 420,000 direct relief checks to Marylanders in need and more than $100 million in additional grants to small businesses and nonprofit organizations. Maryland has committed more federal funds from the American Rescue Plan Act of 2021 than nearly any other state, distributed more than $14.1 billion in unemployment aid, and committed more than $248 million in rental assistance.
Enhancements for State Employees. With fall negotiations for collective bargaining for public employees about to begin, Governor Hogan has directed the Maryland Department of Budget and Management to explore how to best utilize some of the available funds to benefit state employees.
Coupled with last week’s $995 million revenue write-up for fiscal 2022 and $1.37 billion in estimated revenues for fiscal 2023, the record budget surplus means state budget writers and policymakers have close to $5 billion in unanticipated revenue as they begin building the fiscal 2023 State budget.
Stay tuned to Conduit Street for more information.
Previous Conduit Street Coverage
State Closes FY21 with $2.5B Fund Balance
Board of Revenue Estimates Approves Nearly $1 Billion Write-Up for FY22
