The budget committees of the General Assembly, Senate Budget and Taxation and House Appropriations, received a budget update and briefing by the Department of Legislative Services (DLS) and Department of Budget and Management (DBM) on the State’s budget outlook for fiscal years 2021 and 2022, and reductions for fiscal year 2021. Using the more favorable revenue projections from the Bureau of Revenue Estimates, the State is facing a $5 billion budget challenge over the next two fiscal years. This is equivalent to about 12% of the planned spending over the two years and aligns revenues to the level received in fiscal year 2018, 4 years prior.

Outlook for Ongoing General Fund Revenues

Adding to the State’s spending pressures are significant increases in temporary cash assistance recipients, which is at a 20-year high, and reduced funding in the Education Trust Fund due to a shortfall in casino revenue. While some reductions have already been approved by the Board of Public Works (BPW) and others are planned for BPW or General Assembly approval during the 2021 session, there is still a great amount of uncertainty in the revenue outlook and how to balance the budget.  Additional federal aid may relieve pressure, however, significant State actions will almost certainly be necessary to address the shortfall and position the State to weather a longer term slowdown. Both DLS and DBM cautioned that delays in State action to address the budget challenge will only add to the challenge for fiscal year 2022.

Both the DLS and DBM presentations summarized the BPW reductions and those to be presented to the General Assembly in January.  BPW General Fund approved actions total $395 million, with the largest reductions being made to higher education – USM institutions and Morgan State University ($126.3 million), and to level fund community colleges ($36.4 million) and independent colleges and universities ($10.6 million); increasing the Medicaid hospital deficit assessment ($35 million); reducing funds for WMATA ($28 million); achieving operational savings in the Departments of Juvenile Services ($15.1 million) and Public Safety and Correctional Services ($7.4 million); and reducing cyber security enhancements.

Summary of July 1,2020 BPW Reductions

Additional administration proposals to balance the fiscal year 2021 budget total almost $1.1 billion. The largest reductions, some of which may require legislative or BPW action include – reductions in education aid ($200 million) and local aid ($130 million); salary savings through no COLA, furloughs or temporary salary reduction ($139 million); funding Medicaid with surplus reinsurance dollars from the individual market ($100 million); further reductions to WMATA; and eliminating the 4% rate increase for Behavioral Health, DDA, and Medicaid Providers.

Summary of Additional Administration Proposals

A Maryland Matters article summarizes discussions from the briefing and comments regarding the spending of COVID-19 relief funds.

Additional details can be found in the Committee presentations and video.