ANNAPOLIS — The ball is now in Gov. Larry Hogan’s court.
Legislators closed out the 2015 General Assembly session passing a budget that, while containing no tax increases, was not the preferred plan of the new Republican governor. Furthermore, those same legislators passed supporting legislation that seeks to paint Hogan into a corner and force him to choose between spending non-mandatory education money this year or locking future governors into a mandate starting in 2017.
And with lawmakers beating a path out of the capital city, Hogan seems to be reverting to his campaign and pre-inauguration posture of keeping his cards very close to his chest.
The biggest question: Will the governor spend $200 million fenced off by lawmakers to pay for a non-mandatory education, state employee raises promised by former Gov. Martin J. O’Malley and a host of other priorities important to the Democratically controlled House and Senate?
“While I firmly believe that we have changed the debate in Annapolis, changed the focus in Annapolis, it is clear that my administration will need to take many additional steps to address our concerns on spending in the future,” Hogan said.
One of those decisions could involve a decision to not spend $200 million in money fenced off by the legislature for education, state employee raises and other programs. Hogan has indicated, but not directly said, he will not spend that money.
“We’re going to have to review all the actions that were taken,” Hogan said. “We’re going to have to look at all the structural problems and shortfalls and see how much money we have to spend on what.”
Hogan said he is similarly reviewing bills that impose a two-year fracking moratorium in the state, tighten sales tax requirements on online hotel bookings and other legislation.
“We’re going to take a look at all the bills that passed,” Hogan said, adding that there were no bills automatically headed for a veto.
Hogan’s post-session decisions, especially on the budget, could play out over the course of the next few months even as counties around the state are looking to Hogan to make decisions on the spending as it affects local budgets.
But month-to-month state revenues remain flat even as there are positive signs of job growth. A decision about spending the fenced-in funds could come as the fiscal year begins, or later in August as the state closes out its fiscal year, or perhaps even later, according to Joseph Getty, Hogan’s legislative director.
“The concern is always how the budget year is going to close out and how it will effect next year’s budget,” Getty said.
The way the session ended, along with unanswered questions about whether Hogan will spend money set aside by the legislature, has left some lawmakers wondering which Hogan they are dealing with — the one who paints himself as a business-friendly moderate Republican or the one who portrays himself as an agent of change seeking to move entrenched Democrats in a different direction.
“I was disappointed that (the Hogan administration) changed their position on the budget numerous times,” House Speaker Michael Busch said. “I think the last time they went out and said they were not going to fund any of the money fenced off in the budget.”
Busch said he and other legislators entered the session expecting a bipartisan relationship “only to see it fall apart at the end.”
The House and Senate ultimately passed a budget that didn’t take into account two supplemental budget proposals from Hogan.
That plan includes roughly $200 million for funding of a non-mandatory education spending formula that benefits 13 jurisdictions, 2 percent cost-of-living increases for state employees, as well as funding for Medicaid and Prince George’s County Hospital.
Chief among Hogan’s objections was the use of $75 million in what was to be a supplemental payment to the state pension system above the state’s annual contribution. Hogan is threatening to not spend that money, which the legislature fenced off, and save it to pay down the deficit next year.
Busch said he believes those priorities will ultimately be funded.
“I’m hopeful that after a couple of weeks and everybody gets to simmer down a little bit, I hope the governor and his advisers understand how important that money is,” Busch said.
If not, the legislature passed a bill that some hope will move Hogan in off his position.
Failure to spend the money that was fenced off for education would trigger the legislation and make the formula mandated spending starting in fiscal 2017. Hogan will have an opportunity to veto the bill but said he hasn’t decided what he will do.
“We think there’s some legal issues with the bill,” Hogan said without elaboration.
Despite tensions that marked the most of the final week, Hogan ended his first 90-day General Assembly session praising the Democratic controlled legislature for working in a bipartisan fashion.
“We had ins and outs here and there but overall we accomplished things in a bipartisan fashion,” Hogan said minutes before both the House and Senate closed out the 2015 session.
But legislative leaders said the collegial atmosphere that marked the early stages of the session withered.
“Look, I think we started off (with a) much bipartisan and collaborative atmosphere than we ended up with, unfortunately,” Busch said.
Hogan had some successes.
Among those was a measure that Hogan and Senate President Thomas V. Mike Miller Jr. billed as a repeal of the stormwater management fee, which the governor and others have branded as “the rain tax.” The bill, sponsored by Miller, maintains the existing ability of local jurisdictions to decide whether to charge a fee to pay for projects to reduce pollution and sediment that is washed into the Chesapeake Bay. The bill imposes additional oversight from the state in return for that flexibility.
Additionally, the legislature passed a military retirement credit, campaign public financing and charter schools bills that Hogan requested. The charter schools bill was perhaps the most heavily amended of the three.
“We got all his priorities done,” Miller said.
Miller described the session as “smooth sailing for the first 86 days. We had a little glitch the last four days when the Speaker wouldn’t accept the second budget and the governor decided to put some more money in pension funds.”
“We’re extending a hand of friendship to him,” Miller said. “We want to work with him. We treated him gently.”
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