ANNAPOLIS — A panel of Maryland lawmakers on Thursday recommended that Gov. Martin O’Malley cut the state’s projected budget deficit of $382 million by more than half in the next fiscal year.
The state’s Spending Affordability Committee also voted to allow the state to increase capital debt limit by $150 million for the next fiscal year.
Maryland is required to have a balanced budget each fiscal year. However, projected spending has exceeded revenues in recent years in what’s known as a structural budget deficit. That means while the state has technically entered fiscal years with a balanced budget, a deficit has returned with stubborn regularity in recent years.
House Speaker Michael Busch, D-Anne Arundel, moved to recommend a reduction in the deficit for fiscal year 2014 by at least $200 million, and the panel approved it on a 17-3 vote.
Democratic supporters of the move noted the state will have nearly addressed a $2 billion budget deficit since 2010.
But Del. Anthony O’Donnell, a Calvert County Republican who is on the panel, questioned why the panel did not seek a recommendation to eliminate the entire structural deficit.
“That would put us in a better fiscal position for the exposure we have to actions that may occur down on Capitol Hill,” O’Donnell said, referring to budget negotiations relating to the “fiscal cliff” in Washington.
The fiscal cliff refers to across-the-board spending cuts and tax increases, if an agreement isn’t reached between Congress and President Barack Obama. Maryland is particularly susceptible to federal cuts, due to its proximity to the nation’s capital.
Busch said the Maryland General Assembly could come back and make further cuts during the session that begins Jan. 9 and runs through the middle of April. O’Malley is scheduled to submit his budget Jan. 16.
“It does not mean that once the governor brings the budget in you cannot make more cuts,” the speaker said.
Busch also noted that additional revenues from expanded gambling that was approved by voters last month projects a significant boost to state revenues in future years.
“So I think, under those circumstances if those revenues hold up, that we will actually be revenue-neutral here,” the speaker said.
The panel also voted to approve a recommendation by the Capital Debt Affordability Committee that a maximum of $1.075 billion in debt be authorized for the 2013 session. That represents a $150 million increase over what the committee had planned.
Democratic supporters noted that the money would be used to pay for job-producing infrastructure improvements in the state, such as ones needed for transportation, a funding area that has been hit hard in Maryland. However, O’Donnell said was thought it would put the state on a path to continue raising the debt limit, and he expressed concern it could lead to a property tax hike down the road.
The panel’s recommendations are not binding on the governor.