Moore’s plan for $150M in cuts to cover child care, Medicaid costs expected to win approval

Gov. Wes Moore on Wednesday proposed nearly $150 million in cuts to Maryland’s $63 billion budget to cover child care and Medicaid costs that are rising faster than expected.

UPDATE: MD leaders approve $148M in cuts to help support Medicaid, child care

The governor’s plan includes a 25% reduction to new funding for security upgrades at colleges and universities and a roughly 10% decrease in funding for local health departments, among dozens of other cuts.

With approval from the three-member Board of Public Works next Wednesday, the state will also cut $25 million in funding for state-run institutions of higher education, decrease funding available for salary increases in the Office of the Public Defender, delay scheduled hirings in several agencies and departments and lower funding for multiple government grant programs.

The Board of Public Works, comprising the governor, comptroller and treasurer, has the authority to approve budget cuts of a certain size when the legislature isn’t in session, and it’s expected to do so next week.

Moore said his administration’s plan, announced in an op-ed to The Baltimore Sun published Wednesday, is to make “targeted and strategic” cuts and grow Maryland’s economy while also protecting state programs and projects that taxpayers value most.

“We’ve taken a disciplined, data-driven approach that prioritizes investment in areas that connect Marylanders with employment and build new pathways to work, wages, and wealth for all,” Moore wrote.

With approval from the Board of Public Works, the administration will set aside the $148.6 million in cuts from this year’s budget.

When the legislature reconvenes in January, lawmakers can then vote to use the money to cover shortfalls expected in this year’s budget for a state-funded program that helps families pay child care costs and for Medicaid expenses.

It’s not yet clear how much the state will need for each program, a senior administration official said Wednesday.

The official, who spoke on the condition of anonymity to brief reporters about the proposal, said that after enrollment in the state’s Child Care Scholarship Program jumped from about 24,000 in early 2023 to roughly 33,000 by the end of the year, the administration expected the number of children enrolled to reach upwards of about 40,000 during the current budget year, which began July 1.

Enrollment was already nearing 41,000 in June and it has continued to rise, the official said.

Shortfalls for the Child Care Scholarship Program aren’t new. The administration proposed during the last legislative session a copay for new families in the program to help fill the gap, though lawmakers weren’t on board with requiring payments from those already in need of state assistance.

Moore and members of his administration have maintained that the program — and expanding access to child care broadly to assist families and empower more women to join and remain in the workforce — is a priority of theirs.

State officials also underestimated the number of Medicaid enrollees who would remain in the program despite the end of relaxed pandemic-era policies.

During the COVID-19 public health emergency, those enrolled in Medicaid continued to receive coverage even if they were no longer eligible. But with the emergency over, those eligible have been required to renew by their next redetermination date or risk losing coverage.

Reimbursements from the federal government to states have also wound down, prompting states to resume the cost-sharing model in place before the pandemic, the Moore administration official said.

Tracking exact costs of the Medicaid “unwinding” has proven difficult for state officials, and the Moore administration underestimated the number of Marylanders who would renew their Medicaid coverage.

State budget officials are continuing to work with government agencies and the comptroller’s office to close out Fiscal Year 2024, which ended June 30, and update exactly how much revenue the state brought in.

Officials are expected to announce new revenue estimates for the coming months during the next Board of Revenue Estimates meeting in September.

The coming months will also provide more clarity to exactly how much the state should prepare to budget for child care and Medicaid.

With about six months to go before the start of the next session, the legislature’s presiding officers, both Democrats, shared vague responses to news of the governor’s preemptive cuts.

Senate President Bill Ferguson said he appreciated the administration’s “thoughtful approach” to tackling the projected shortfalls, adding that “as new data emerges in the coming months, the Senate of Maryland will continue to make the best budget decisions to invest in our residents and grow our economy.”

House Speaker Adrienne Jones, who oversees a chamber that’s expected to continue pushing hard for tax and toll reforms to cover major projected shortfalls in both the state’s operating budget and transportation spending plan, said the governor’s announcement is “part of an ongoing process where we’ll look at every option to continue to balance our budget and protect our priorities.”

(This story has been updated.)