Daily Record Staff//April 10, 2020
//April 10, 2020
ANNAPOLIS — Gov. Larry Hogan Friday imposed a spending and hiring freeze and said additional budget cuts are likely as the state faces a potential loss of nearly $3 billion in revenue through the end of June as a result of the COVID-19 pandemic.
Hogan also said it is likely that he will not sign any bills sent to him by the General Assembly that include mandated spending. The governor, however, did not say if that meant he would veto a multibillion-dollar proposal to increase annual spending on education and a number of tax bills passed to support that plan.
“While the executive branch has not yet had any time to review any of this legislation, I want to be clear that it is very unlikely that any bills that require increased spending will be signed into law,” Hogan said.
Hogan would not commit to vetoing any of the more and 600 bills sent to him Tuesday — many passed in the final days of a session abbreviated by the virus — including the Kirwan Commission recommendations and tax bills meant to partially cover the eventual $4 billion in additional annual education spending. Some of the initial revenue from those tax bills was set aside for potential costs of the response to the pandemic.
The governor has 30 days to review and sign or veto bills. Any bill not vetoed by Hogan would become law without his signature.
Senate President Bill Ferguson, in a statement released Friday night, said “hard choices lie ahead” but cautioned that it was too soon to know “whether these funds will be insufficient to cover the costs associated with Maryland’s appropriate and timely response to COVID-19’s spread in our state.”
“What we also do know is that Maryland’s government must be there for her residents. We must make certain that those who are applying for assistance — be it for unemployment benefits, food assistance, or other critical necessities — are having their needs addressed,” Ferguson said in his statement. “We must take care of our employees, we must take care of Marylanders’ critical needs, and we must make sure that every Maryland child has access to educational tools — both throughout this crisis, and into the future.”
The governor’s announcements came less than an hour after Comptroller Peter Franchot announced a worst-case scenario of revenue loss from personal income and sales taxes that could total $2.8 billion by the time the current fiscal year ends on June 30.
“I think he was looking at the worst-case scenario,” said Hogan. “Hopefully, we will not have to make the kind of cuts he was envisioning, but that’s certainly a possibility.”
Hogan said instead it is likely that he will “tap into and be spending much of, perhaps all of the state’s rainy day fund balance.”
Other actions are also likely. With three months left in the fiscal year that ends June 30, Hogan and the Board of Public Works may have to make cuts to spending in the current fiscal year.
Hogan said he has directed the Office of Budget and Management to begin identifying cuts in all departments but said no specific cuts had been ruled in or out, including possible layoffs or furloughs of state employees.
“Response to this crisis will likely create a multi-year budget issue that will require further substantial budget actions,” he said.
The Board of Public Works, chaired by Hogan, has the authority to cut up to 25% of a department’s budget without the approval of the General Assembly.
Franchot, who also serves on the board with Treasurer Nancy Kopp, said he expects that the panel will make deeper cuts than those made under Gov. Martin O’Malley during the Great Recession.
“That period, as awful as it was and it was just horrendously painful, is going to be like a picnic compared to what we’re going to go through with this coronavirus impact on our state budget,” Franchot said. “What we’re talking about is something that’s obviously unprecedented.”
The declines highlighted by Franchot were driven by executive orders issued by Hogan that closed non-essential businesses and an order that residents remain in their homes except for exercise and necessities.
Hogan, in his spending order, excluded spending related to COVID-19.
Hogan also made a number of other announcements including:
And while Hogan urged families to avoid the traditional gatherings that come with the celebration of religious holidays such as Passover and Easter, he sought to ease the minds of children in Maryland. The governor announced that he had signed a proclamation declaring the Easter Bunny an “essential worker” for Easter Sunday.v