Md. state budget called structurally sound in coming year

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ANNAPOLIS — Maryland’s state budget is balanced.

For now at least, according to a briefing given Wednesday by the legislature’s top budget analyst to House and Senate fiscal leaders.

“I can tell you, with respect to the budget, the news for the short term is good,” said Warren Deschenaux. “Our budget will be in a state of balance in the current fiscal year and probably into the next fiscal year as well.”

The announcement to the joint Spending Affordability Committee means state lawmakers will likely have more to smile about in January when it comes to the budget than they’ve had in recent years.

Lawmakers will use the information to make final recommendations to the governor regarding the state budget and use of any surplus money next month.

Deschenaux called those decisions “serious.”

The state’s sluggish but improving fiscal condition could also set up a budget battle between Gov. Larry Hogan and the Democratic-controlled legislature.

Hogan wants to slow if not roll back the rate of state spending and find a way to reduce overall taxes. The governor and his staff have said the short-term budget news gets bleaker in later years and a structural deficit will grow to $1 billion over five years if spending is not controlled.

Budget analysts told legislators their projections show budgets falling out of balance beginning in fiscal 2019 and growing to about $1 billion over the following three years, including $465 million alone in fiscal 2021.

Some Democrats have already said they are eager to discuss the possibility of new or expanded programs after years of belt-tightening following a historic national recession.

Hogan is already proposing limits on spending — particularly state general obligation bonds. Hogan is proposing holding spending on projects just under $1 billion and at a level that is $50 million less than the current year.

“He’s proposing leaving it at that level for the next 10 years,” Deschenaux said.

The governor’s plan doesn’t include any inflationary increases, something that has been typical in past years.

“What appears to be driving this is a desire to reduce the reliance on the general fund budget for debt service,” Deschenaux said. “The only real way to do that is to stop issuing debt.”

Bond spending is driven in part by school construction and renovation projects. In recent years, school construction spending has exceeded $400 million. Deschenaux said the governor’s current plan is to spend $250 million in each of the next four years.

“Whether that’s realistic in light of the needs that are out there is something for you all to consider,” Deschenaux told lawmakers.