Maryland Governor Unveils Budget, Wants Tax Cuts, Increases Education Spending

Maryland Gov. Larry Hogan announced his proposed budget for the state will total $17.1 billion, offer $400 million in tax and fee cuts, and calls for a common-sense approach to mandated spending when revenues are down.

At a press conference in Annapolis, Maryland, the governor said his administration inherited $5.1 billion in accumulated deficits, including a $2.1 billion deficit in 2015 and 2016. Using words like "terrible," "mess," and "trickery," he said they have been able to reduce almost 90 percent of that deficit.

“We’re picking up the bar tab they left,” Hogan said, adding his budget will continue to build on his administration’s progress.

Hogan also announced tax relief legislation that will result in $400 million in tax and fee cuts to about 1 million residents and 300,000 businesses over the next five years. He said the ones who will benefit the most are the ones who have been struggling the most – families, retirees, and small business owners.

House Speaker Michael Busch wants to know how the governor intends to make up the difference in lost tax revenue.

"In all fairness you have to have some kind of explanation if you do such taxes, where some revenues will be raised to make that revenue neutral," Busch told NBC affiliate WBAL-TV in Baltimore.

His budget includes a Rainy Day Fund balance of $1.1 billion and a surplus of $445 million going into the 2018 fiscal year. He also said roads and bridges figure heavily into his plans, and he’s requesting $6.3 billion for K-12 education, an increase of $140 million.

“Our administration has said repeatedly that we would bring fiscal restraint back to Annapolis, hold the line on spending, and increase funding for top priorities like education and infrastructure. This year’s budget accomplishes all those things,” said Hogan. “I hope that it will set the stage for bipartisanship, cooperation, and continued fiscal responsibility.”

Hogan called for bipartisan, predictable, and common-sense budget reform to deal with mandated spending increases. Currently, mandated spending accounts for 83 percent of the operating budget.

The governor said by fiscal year 2021, the state will be required to spend $3 billion more per year than it does today. To address this issue, the Hogan administration will introduce a bill that aims to control mandated spending increases in years when revenues are down and do not keep pace with the statutory increases.

“People elected me, because they want some checks and balances,” Hogan said.

The governor must present his budget to the state Legislature within the next two weeks. The General Assembly will reconvene on Jan. 13.

Highlights of the governor’s FY 2017 proposed budget include:

  • $17.1 billion operating budget
  • $1.1 billion Rainy Day Fund balance
  • Approximately $440 million cash balance going into FY 2018
  • Fully funds every single General Assembly statutory spending obligation
  • Delivers approximately $400 million in tax and fee relief to an estimated 1 million Maryland citizens and to over 300,000 small businesses over the next five years
  • Fully funds 100 percent of education spending increases – based on the formulas set by the legislature
  • Fully funds the Geographic Cost of Education Index (GCEI)
  • $6.3 billion for K-12 education, an increase of $140 million
  • $314 million for new school construction projects
  • $231 million in highway user revenues – an increase of 18.9%
  • $7.3 billion in aid to local governments – an increase of 3.3%
  • Sets capital debt limit at $995 million – below the level proposed by the legislature
  • $35 million to address the long-standing deficiencies accrued by the previous administration
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