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Del. Maggie McIntosh, D-Baltimore City and chairwoman of the House Appropriations Committee, says the governor’s supplemental budget proposal would result in less deficit reduction. (File photo)

Md. budget negotiators confront a shifting deficit number

ANNAPOLIS — Democratic lawmakers say they are surprised and concerned that a proposed supplemental budget proposed by Gov. Larry Hogan reduced the amount of the structural deficit that would be paid down in the coming year.

The issue is one of a number of items the House of Delegates and Senate will attempt to resolve as they work to complete the budget before the end of session in a week.

“(Hogan) put in a supplemental budget that brings him, in terms of the structural deficit, not nearly as far along as the House (budget),” said Del. Maggie McIntosh, D-Baltimore City and chairwoman of the House Appropriations Committee.

Hogan’s supplemental budget, the second he has introduced this session, contains $44.8 million in additional spending. Included in that package is funding for 100 new Maryland state troopers, re-opening the Annapolis barracks closed under Gov. Martin J. O’Malley, paying for tax breaks in retirement income for first responders and military retirees, and tax breaks for businesses that contribute to financial assistance programs at non-public schools.

Amended forms of some of Hogan’s tax cuts are working through the Senate but have yet to move in the House.

Joseph Getty, Hogan’s legislative director, said the governor could still reduce the size of the deficit. The reductions could come at expense of some priorities of the Democratic legislature.

“It only widens the state deficit if the governor spends the $200 million that is fenced off,” Getty said. “If he doesn’t spend that $200 million that the legislature fenced off, he is able to close the gap.”

The legislature cannot require Hogan to spend the money but can require him to spend it on specific programs if he were to decide to spend it at all.

“In fact, we could get it to 80 or 85 percent if the $200 million isn’t spent,” Getty said.

Legislative analysts told House and Senate Fiscal leaders that the supplemental proposal brings the amount of structural deficit paid down in the coming fiscal year to 65 percent. The respective plans passed by the two chambers had cut the deficit by 75 percent and that amount could grow to 88 percent should Hogan accomplish his proposal to trim 2 percent in spending across every state agency.

Hogan introduced a budget that eliminated the $750 million structural deficit in one year. Democratic lawmakers balked, saying the plan made cuts to important spending such as a non-mandated formula for education, a 2 percent raise for state employees and health care for some pregnant women.

Both the House and Senate agreed on restoring funding for education and employee raises. Some of the money used to pay for those programs came from expected additional contributions to the state employees retirement plans—a move Hogan and many Republicans dislike.

The Senate passed its version of the $40.4 billion budget, which includes more than $16 billion in general fund spending, 10 days ago.

Key changes to the plan passed by the House include the restoration of 50 positions within the Maryland State Police. Legislators in the House deleted the positions but left the funding, saying that the money could be used by Hogan to make the 2 percent spending cuts for the agency.

Also added by the Senate is a provision to eliminate the personal property taxes on cranes owned and used by the company that operates the Port of Baltimore for the state.

McIntosh said last month that the tax break on port cranes could be an issue because it cuts city revenues by as much as $2 million.

A scheduled Monday afternoon conference committee meeting between fiscal leaders from the House and Senate was canceled.