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Md. programs on hold as Hogan considers $80M of spending

Gov. Larry Hogan. (File)

Gov. Larry Hogan. (File)

Nearly $80 million in state aid for teacher pensions, renovation of aging schools, Medicare reimbursements and the demolition of the Baltimore City Detention Center is in limbo as Gov. Larry Hogan considers whether to release money for those programs.

The legislature earlier this year approved a plan that fenced off the funds, which had been moved from the state’s so-called rainy day account. Lawmakers stipulated an all-or-nothing spending requirement on the governor. But a spokesman for Hogan said that no decisions have been made regarding releasing the money for the budget year that begins July 1.

“The administration is reviewing it,” said Douglass Mayer, a Hogan spokesman. “It’s $80 million that was taken out of the rainy day fund and Governor Hogan has been very clear about his interest in putting Maryland on sound fiscal footing.”

The rainy day fund, more formally known as the Revenue Stabilization Account, is money set aside in an amount equal to 7.5 percent of estimated general fund revenue. The money is meant to help the state offset severe economic declines. The nearly $80 million transferred out of the account in the budget passed this year was in excess of the statutory requirement, leaving the bare minimum mandated by law.

“Some people might think that the statutory requirement is the bare minimum,” Mayer said.

Included in the amount are:

  • Nearly $19 million in aid to local counties for teacher pensions.
  • $15 million for the repair and rehabilitation of state-owned facilities
  • $13.2 million  to increase Medicare payments to primary and specialty physicians.
  • Nearly $9.2 million for the continued design and construction of a unified public safety communications system.
  • Nearly $6.6 million for the demolition of buildings at the city detention center complex.
  • More than $6.1 million for the state’s aging schools renovation program.
  • $6 million to implement best practices to reduce soil and nutrient runoff from Maryland farms.
  • $1 million in state supplemental funds for the Supplemental Nutrition Assistance Program that provides food assistance for low-income residents.
  • Nearly $2 million for other Medicare programs including lead paint remediation in homes of children poisoned by the toxin, the city health department and increased reimbursements for behavioral health treatment.

Sen. Richard S. Madaleno Jr. said the decision to package some projects Hogan might want to fund with some he might be wary of and make it an all-or-nothing proposition was deliberate. It was lawmakers’ response to how the governor handled $200 million in fenced-off money last year and his insistence at holding borrowing to $995 million this year, Madaleno said.

“We decided the prudent course of action was to fund the priorities (Hogan) ignored and provide this pre-authorized way to spend the surplus from the rainy day fund to pay for some other items,” Madaleno said. “Last year he cherry-picked items from what the legislature fenced off. We decided this year it was all or nothing.”

The delay in a decision has already had an effect on potential projects as part of the state’s program to renovate and maintain aging schools.

David Lever, executive director of the state Interagency Committee on School Construction, said approval for spending that money typically comes in May from the Board of Public Works. Local school systems begin submitting requests soon after in the hope of having the money in time to start work over the summer.

So far, only Montgomery County has submitted a list of proposed projects, but that jurisdiction and every other in Maryland has been told that the committee will not review or approve any requests until it is sure there will be money for them, Lever said.

The budget as passed requires Hogan to transfer the money in one chunk rather than piecemeal, thus preventing the governor from, if he desired, picking and choosing favored spending. If the money is not transferred, it would revert to the state’s general fund rather than return to the rainy day account.

The legislative maneuver essentially fenced off the money from other uses. In January, Hogan drew a line in the sand with legislators after the General Assembly restricted the used of $200 million last year.

“Fencing off money will not work,” Hogan told reporters during a January budget briefing. “We’ll be happy to hold onto the money and build up our reserves.”