Hogan orders state hiring and spending freeze, eyes budget cuts

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:

• Issuing a proclamation supporting the state Board of Elections’ decision to conduct the June 2 primary election mostly by mail but leaving open the opportunity for those who are disabled or otherwise need assistance the opportunity to vote in person.
• The state is deploying employees from other departments to assist the Department of Labor, Licensing and Regulation in completing unemployment insurance claims. The department has been beset by a historical number of claims — nearly 250,000 — in three weeks. While nearly 95 percent have been submitted online, according to Hogan, the balance have been forced to file via telephone and experienced wait times of several hours if they are even able to reach the department at all. Hogan called the inability to file claims “not acceptable to me.”
• The creation of a new voluntary registry for patients who have successfully recovered from COVID-19. At the site, patients can share their stories and learn about the ability to volunteer for clinical studies, including one at Johns Hopkins that will look at the use of antibodies from the blood of patients who were infected and recovered.
• A new decontamination site at Baltimore-Washington Thurgood Marshall International Airport, where masks will cleaned and sterilized for reuse using a machine made by an Ohio company.
• A $2.5 million program through the University of Maryland School of Medicine to establish a testing site that may be able to handle up to 20,000 COVID-19 tests daily.

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.

COVID-19 COVERAGE

READ: COVID-19 stories
CHART: Confirmed cases over time | LIST: Map: cases by county