Hogan’s budget outline: cuts, trims and reductions

ANNAPOLIS — Just 24 hours after being sworn in, Gov. Larry Hogan made good on a promise to announce his first budget, which he said eliminates a $750 million structural deficit in his first year and moves the state toward more sound budgeting for the future.

The $16.4 billion general fund operating budget, which came without the massive supporting budget books that have been available in previous years, represents an increase of .05 percent and is balanced against projected revenue of $16.4 billion.

Hogan said his proposal puts an end to what he called “budget gimmickry and games that have put our state on the path to financial peril.”

I am proud to say we will eliminate the structural budget deficit today,” Hogan said.

Documents released by the governor Thursday show the budget deficit for the current year at about $423 million — nearly $20 million higher than when then-Gov. Martin J. O’Malley made cuts to the budget two weeks ago.

The projected budget deficit for the fiscal 2016 budget increased from $750 million to $802 million.

Hogan said his budget includes:

• A 2 percent across-the-board cut to state agencies, equal to about $112 million. Those cuts have not been specified.
• A 50 percent reduction in the education formula known as the Geographic Cost of Education Index and other aid to education equal to $143 million.
• A $25 million reduction in aid to local governments.
• A decrease in the amount of bonds the state was expected to issue.
• About $4 million in transfers from other unidentified funds.

In transportation, Hogan’s budget contains $2.8 billion for projects and includes money earmarked for the Purple and Red Line rail projects. Hogan said that money is a placeholder until his administration can complete a review of both projects and decide the ultimate fate of both rail lines that are currently estimated to carry a combined cost approaching $6 billion.

The newly sworn-in governor said his budget contains an additional $45.3 million in state aid to education and $280 million for school construction — a reduction from what top adviser Robert R. “Bobby Neall called “the glory days” of such spending.

Also included is $1.2 billion in funding for the University System of Maryland, an increase of $15.4 million, or 1.3 percent compared to the current budget.

Hogan also announced that his budget would contain $12 million in biotechnology tax credits and $9.4 million for stem cell research as well as $2.5 million in tax credits for cybersecurity research.

But many questions remain. Hogan did not release detailed budget documents as has been done with past administrations but promised them before the weekend.

Legislative leaders who were briefed earlier in the day said they were also not provided the same level of detail as in past years.

“I can’t go into detail because I don’t have it,” said Del. Maggie McIntosh, D-Baltimore City and chair of the House Appropriations Committee.

McIntosh said the administration has not released a total spending number. The current budget, prior to the cuts made by O’Malley, approached $40 billion.

“I will say that the governor just got sworn in 24 hours ago, and I’ll absolutely give him that benefit of the doubt but I would say this briefing did not have the detail that we’ve typically been able to get,” McIntosh said.

McIntosh said, based on her back-of-the-envelope review of what budget detail was provided, that Hogan cut “$225 million or more from K-12 education, another $225 million came from our state employees … in salaries and (cost of living adjustments) merit pays, the other $200-plus million comes from health care, and as you know it always comes from Medicaid and the folks, hospitals, nursing homes who actually treat our Medicaid patients.”

McIntosh suggested Hogan’s budget may be moving too fast to eliminate the deficit.

“We have a $700 million-plus structural deficit that they say they have eliminated in 24 hours,” McIntosh said, adding later: “The line that we’ve eliminated the structural deficit in 24 hours, maybe we should take a little longer. Maybe we need to look at this over a 90-day period and maybe we don’t need to find all the answers this year.”