Governor’s 2023 Budget – What It Means for Counties

Governor Larry Hogan this week unveiled a record-setting fiscal 2023 proposed budget, as state officials project balanced budgets through 2028, with none of the typical warnings of billion-dollar shortfalls.

According to Governor Hogan, the $58.2 billion budget proposal “strengthens the state’s rainy day fund to record levels, delivers major tax relief to retirees and working families, expands relief for vulnerable Marylanders, makes a record investment in K-12 education and school construction, increases funding for the Maryland Park Service, fully funds Chesapeake Bay restoration, and provides record funding for addressing mental health and substance use disorders.”

In addition to a $2.4 billion appropriation to the State’s rainy day fund, the proposal provides for a $1.3 billion structural surplus.

The governor’s proposed budget provides $9.7 billion in aid to local governments – $672 million over fiscal 2022. The primary increases include an additional $556.6 million for K-12 education aid, $58.4 million for public safety, $28.6 million for Program Open Space, and $19.2 million for community colleges.

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Community Colleges

State funding of Maryland’s community colleges is driven by the Senator John R. Cade funding formula, established as law in 1996. The Cade funding aims to provide community colleges with predictable support for operations and help maintain affordable tuition rates.

The intent of the Cade formula is that community college costs be divided into equal thirds between the state, local government, and student tuition/fees. Unfortunately, due to budgetary constraints over the years, the Cade funding goal has typically not been met.

The original intent of the Cade funding formula was for the State to provide 29% of community college funding by 2012. However, the state has adjusted the formula several times over the past ten years – delaying its commitment to fund the Cade formula fully.

The governor’s proposed budget fully funds the Cade funding formula for community colleges.

K-12 Education

The governor’s budget proposal provides $8.15 billion for K-12 education and $1.0 billion for school construction.

The proposal does not include $125 million in seemingly mandated funding for the highest concentration of high-poverty schools, a hallmark of the Blueprint for Maryland’s Future.

Police Aid

The proposed budget includes a $45 million increase in aid to local police departments, which would bring total aid to $122.5 million. In addition, the proposed budget includes nearly $60 million in direct local law enforcement grants.

Local Health Departments

$75 million in core funding for local health departments.

School Construction

The governor’s fiscal 2023 proposed budget continues the $2.2 billion Built to Learn Fund initiative with $480 million in revenue bonds. GO bonds and general funds will finance the Public School Construction Program ($285 million), Supplemental Construction Grant Program ($95 million), and the Healthy School Facility Fund ($50 million in GO bonds, plus $40 million in federal funds). A new School Construction Revolving Loan Fund, $40 million in fiscal 2023, will assist counties with meeting their local matching requirements.

The FY 2023 – 2027 CIP plans a total of $3.3 billion for school construction.

What’s Next?

By custom, the House and Senate move the budget bill in alternate years – the House moves the budget in odd-numbered years, and the Senate moves the budget in even-numbered years. So, for example, the budget bill will start in the Senate this year.

Stay tuned to Conduit Street for more analysis in the days and weeks ahead.

Useful Links

Proposed Budget Documents (fiscal 2023):

Budget Highlights

Proposed Operating Budget Detail by Agency