regular persons guide to the 2011 maryland budget

8/14/2019 Regular Persons Guide to the 2011 Maryland Budget

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THE REGULARPERSONSGUIDE TO THE GOVERNORSFISCALYEAR2011BUDGET

MARYLAND BUDGET &TAX POLICYINSTITUTE

FEBRUARY2010


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This publication has been prepared by the Maryland Budget and Tax Policy Institute.

The Maryland Budget and Tax Policy Institute is a nonpartisanresearch organization that provides timely, accurate, and accessibleanalysis of state budget and tax issues. In addition to general budgetand tax research and analysis, the Institute examines issues affectingvulnerable populations and the important community associations

that serve them. For monthly reports on current issues andadditional information on the Institute, or to be added to our e-maillist, please visit our website atwww.marylandpolicy.org.

The Maryland Budget and Tax Institute gratefully acknowledges the Open Society Institute Baltimore and the following funders, which provide general support for Institute operations, includingthe Ford Foundation, the Fund for Change, the Eugene and Agnes E. Meyer Foundation, the MoriahFoundation and generous individual contributors.

The Institute is a project of Maryland Nonprofits: www.marylandnonprofits.org.

Maryland Nonprofits is a 501 c (3) organization, tax deductible contributions may be directed tosupport the work of the Institute atwww.marylandpolicy.orgorwww.marylandnonprofits.org.

Maryland Association of Nonprofit Organizations, Maryland Budget and Tax Policy Institute, 2010


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Contents

Fast Budget Facts.1

Introduction.2

Budget Overview..3

Overall Size and Growth...3

Balancing the Budget4

Spending Reductions..4

Budget Reconciliation.5

Revenues...7

Expenditures...9

Federal Recovery Act Funding....11

Spending Affordability12

State Employment...12

Long-Range Forecast..13

Capital Budget.14

Subject Areas...15

K-12 Education..15

Higher Education...17

Health19

Transportation...20

Human Services.22

Public Safety..23

Natural Resources and Environment.24

Budget Process26

Timetable..27

Budget Glossary..29

Useful Websites...31

Sources.... 32


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February 2010 Regular Persons Guide to the Fiscal 2011 Budget Page 1

Fast Budget FactsFast Budget FactsFast Budget FactsFast Budget Facts

Proposed Budget for the State of Maryland

Fiscal Year 2011 Size: $32.1 billion

o Decrease from this year: $0.2 billion (-0.8%) 3 biggest items:

1. Health $8.7 billion2. K-12 Education $6.9 billion3. Higher Education $5.1 billion

3 biggest revenues:1. Federal Funds $9.3 billion2. Individual Income Tax $6.3 billion3. Sales Tax $3.9 billion

3 biggest increases:1. Health $407 million (5.1%)2. Higher Education $131 million (2.6%)3. Human Resources $82 million (4.6%)

How is the budget balanced?o $1.0 billion in net cuts from baseline budget levelso

$910 million in transfers to the general fund from accounting reserves and specialfundso $389 million assumed additional federal stimulus aid

Budget processo Introduced by the Governor January 20, 2010o Legislature must enact balanced budgeto Legislature may cut from the budget, but may not addo Governor may submit supplemental budgetso Revised revenue estimates in Marcho Legislature scheduled to complete budget April 5, 2010o New budget takes effect July 1, 2010


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February 2010 Regular Persons Guide to the Budget Page 2

IntroductionIntroductionIntroductionIntroduction

The purpose of the Regular Persons Guide to the Governors Budget, as the name suggests, is toprovide basic, useful information about the States spending plan to people who normally do not

live and breathe this stuff.

The Guide has four main sections:1. Overview: General information about the size, contents, and major changes in the budget.2. Subject Areas: More specific information about the seven largest state government

functions, plus an other section for everything else.3. Budget Process: A step-by-step reference to the states process for developing and

approving the budget.4. References: Additional resources that might be helpful, including a glossary of technical

terms and a listing of useful Internet sites.

The trick to a document like this is to keep it simple, and still explain enough of the intricacies so asto give you a fair understanding. To help achieve this balance, we have inserted technicalbackground where appropriate in boxes:

Technical NotesThe technical notes look like this. You can read them, or skip over them as you find useful.

This report draws extensively from the Budget Highlights book and the detailed budget booksprepared by the Department of Budget and Management (DBM), and from the Fiscal Briefingpresented by the Department of Legislative Services (DLS) on January 25, 2010. Maryland isblessed to have highly dedicated, expert, and public-spirited analysis staffs at these agencies.MB&TPI is deeply indebted to them in being able to bring you this guide.


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Budget OverviewBudget OverviewBudget OverviewBudget Overview

Overall Size and Growth

Total Budget: $32.1 billiono Decrease from this year: $0.2 billion (-0.8%)

General Fund Budget: $13.2 billiono Reduction from current year: $0.3 billion (-2.0%)

General Funds and Other FundsGeneral Funds are the monies available for the state to use for most of its functions without restrictions. They comemostly from income and sales taxes. General funds do not include payments to the state from the federal government(federal funds), fund sources that are restricted for specific purposes, like transportation or environmental programs(special funds), or funds raised by state colleges and universities in student fees, grants, contracts and the like

(higher education funds).

Fiscal YearThe state budgets and accounts for its finances using a fiscal year that begins July 1 and ends June 30. It is namedfor the calendar year in which it ends. We are now in fiscal year 2010, which began July 1, 2009 and will end June30, 2009. The legislature is considering the budget for fiscal year 2011, which begins July 1, 2010.

General, 13.4 General, 13.2

Special, 5.7 Special, 6.0

Federal, 9.8 Federal, 9.3

Higher Ed., 3.4Higher Ed., 3.5

0

5

10

15

20

25

30

35

FY 2010 FY2011

$

billions

Budget Totals by Fund SourceBudget Totals by Fund SourceBudget Totals by Fund SourceBudget Totals by Fund Source


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Balancing the BudgetBalancing the BudgetBalancing the BudgetBalancing the Budget

Like 49 of the 50 states, Maryland is required to balance its budget. In 2007, the legislature met in aspecial session to solve a persistent structural deficit. This means that ongoing expenses exceededongoing revenues. The deficit was addressed by restraining the growth of expenditures (especiallyfor local school systems), spending down fund balances and taking advantage of one-time revenue

sources and temporary savings. Over the long range, the plan relied on revenue from slot machineoperations to keep the budget in balance after 2011.

In December 2007, the nation entered the longest and most severe economic recession since theGreat Depression of the 1930s. The poor national economy affected income and sales taxes Marylands principal sources of general revenue. Since then, the state has acted on eight separateoccasions to reduce budgeted expenditures to meet reduced revenue projections. The legislature hasenacted two budgets with a combined $1.7 billion in cuts. Six times, the states Board of PublicWorks has approved a combined $1.5 billion from budgets already enacted into law.

Spending Reductions

Spending Plan is $1.0 Billion below the BaselineThe Department of Legislative Services has estimated the reductions in the proposed budgetcompared to an estimate of baseline expenditures at $965 million.

Baseline BudgetA spending plan used as a starting point for developing a budget, or a point of comparison for budget analysis. In thecase of the DLS baseline, the estimate incorporates the cost for the upcoming fiscal year of providing current services atcurrent levels, increases and reductions to implement statutory requirements, and funding of specific commitments.


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The largest reductions from the fiscal year 2010 baseline are as follows:

State employee compensation no raises, no deferredcomp match, reduced fringe benefit estimates

275 m

Medicaid reduced cost estimates and reduced

hospital rates

170 m

Health and social services reductions for childrensservices, no rate increase for community providers,mental health and disability services below baselineestimate

63 m

Local aid reductions pupil transportation,community colleges, and local health

50 m

Corrections reduced funding for overtime andinmate medical services. No state funding for localjails.

49 m

State higher education and scholarships level-fundedwith 2010 reduced levels

20 m

Private higher education reduced 22 m

Budget Reconciliation

Changing the rules to balance the budgetSome of the reductions would violate existing statutory funding requirements and requireauthorizing legislation to be implemented.

The Governors budget plan includes $677 million in reductions that require separate legislativeauthorization and $910 million in transfers from restricted funds. The Governor has introduced abill, known as the Budget Reconciliation and Financing Act (BRFA House Bill 151/Senate Bill141) to make most of the necessary changes in law.

Money from piggy banks and under sofa cushionsOn a 12-month basis, the budget for fiscal year 2011 is still not structurally balanced. Under theGovernors plan, the state will spend (in general funds) $13.2 billion and take in $12.6 billion. Thisgap of $600 million is made up by spending down the general fund balance, transferring moneyfrom the local income tax reserve fund and other special accounts, and using bond funds instead ofcurrent revenues for capital programs.


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Balance Sheet Analysis

Fiscal Year 2011 - General Funds - $ millions

Sources Uses

Revenues 12,678 Expenditures 13,177

2009 General Fund Shortfall -443

Remaining balance 273

Transfers approved in 2009session

102

Proposed Fund BalanceTransfers *

671

Transfers from capitalprograms (replaced withbonds)*

442

Total Sources 13,450 Total Uses 13,450

*$701 million of these transfers are to occur in fiscal year 2010 to balance out theprojected shortfall

General Fund BalanceThe general fund balance is the unrestricted, unobligated amount left in the general treasury at the end of the year. It isavailable to help balance the next years budget. We can think of it as the states checking account balance.

Fiscal 2010 BalanceThe Governors budget proposed $371 million in transfers from special and reserve funds during fiscal year 2010 and

$330 million is transfers from environmental and housing capital programs, to be authorized in the 2010 legislativesession. These transfers would be made after the fiscal year 2011 BRFA is enacted but before the end of the currentfiscal year on June 30, 2010. Without these transfers, fiscal year 2010 would finish with a $467 million deficitinstead of a $258 million surplus.


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RevenuesRevenuesRevenuesRevenues

Overall, individual income tax and federal payments are the states largest revenue sources. The bulkof federal funds are dedicated to health, human services, education, and transportation programs.The graph shows federal funds from Recovery Act provisions, totaling $1.3 billion, as a separate

slice. These revenues are not scheduled to continue in future years. Video lottery terminals (slotmachines) are projected to produce $85 million in revenue in fiscal 2011. This amount, about of 1percent of the total is included in the other slice.

Revenue estimates are particularly important to thegeneral fundbudget. Maryland relies on incomeand sales taxes for 3/4 of its general fund revenue. Since these sources are quite sensitive toeconomic conditions, forecasts of the national and state economies are central to projectingrevenues.

Individual

income tax

20%

Corporation

income tax

4%

Sales tax

12%

Lottery

2%

Gas tax &

transportation

7%

Higher

Education

11%

Recovery Act

4%

Other Federal

25%

Other17%

Total Revenues FY 2011

$ Billions

Total = $32.3 Billion


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The Board of Revenue Estimates observes that the states revenues are beginning to stabilize. Theyare, however stabilizing at a low level. The revenues estimated for this year are below the actualcollections in fiscal 2007. The poor national economy has essentially negated four years of regulareconomic growth plus the additional revenues enacted at the 2007 special session.

Official Revenue EstimatesIn December, the Board of Revenue Estimates issues official revenue estimates for the upcoming budget. The Boardconsists of the Comptroller, the Treasurer and the Secretary of Budget and Management, and it is supported by a smallprofessional staff, economists and financial professionals in various state agencies, and an Economic Advisory Panel ofvolunteer private-sector experts. In March, the Board updates its estimate to reflect any new factors in either economicor collection data.

In Maryland we have a tradition of professional and fair-minded revenue estimating. If there is any bias, it is towardsmore conservative (i.e. safer) estimates. Unlike some states, Maryland has not had issues with political manipulationof the revenue estimates.

Individual

income tax

50%

Corporation

income tax

4%

Sales tax

28%

Lottery

4%

Tobacco tax

3%

Franchise &

insurance taxes

3% Other

8%

General Fund Revenues FY 2011

Total = $12.7 Billion


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ExpendituresExpendituresExpendituresExpenditures

The largest items in the state budget are health and education. Health and all levels of educationtogether comprise over half of the state budget. If we add transportation, human services and publicsafety then the six largest functions total 89%. The remaining 11% covers everything else, including:environmental programs, the court system, debt payments, business development, arts and culture,

and tax collection.

Health

28%

K-12Education

21%Higher

Education

16%

Transportation

11%

Human

Services

7%

Public

Safety

6%

Debt

Service

3%

Nat.

Resources &

Environmen

t

2% Others

6%

Total Budget FY 2011Total = $32.0 Billion


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February 2010 Regu

The following chart shows the gr

Health is the biggest gainer overalincreasing costs for mental health

expenditures decline, reflecting reTransportation also declines refconstruction. The next chart focu

(300) (200) (100)

Higher Ed

Transp

Human

Nat. Res

Debt

Publi

K-12 Ed

Budget

lar Persons Guide to the Budget

wth in the total budget, from fiscal year 2010 to

l. This increase reflects increases in Medicaid casand developmental disability services. K-12 edu

ductions in federal Recovery Act funds directed tecting reductions in both state and federal fundsses exclusively on general funds.

- 100 200 3

Health

ucation

rtation

ervices

. & Env.

Service

Safety

ucation

$ millions

rowth FY 2011 over FY 2010

Total Funds

Page 10

011.

eloads as well asation

education.for highway

0 400


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February 2010 Regu

Again, health is the large gainer, rand public safety have modest gaiarrangements. The budget proposaccount to the Education Trust Fsystems, in place of an equivalentservices also are reduced in gener

The Federal RecThe Federal RecThe Federal RecThe Federal Rec

The American Recovery and Rein$787 billion into the economy, incushion the effects of the currentrelief from taxes for individuals aassistance would go to infrastruct

(400) (300) (200)

Hi

N

H

Budget


flecting Medicaid enrollment and cost increases.s. K-12 education loses general funds, mostly be

es to transfer $350 million from the local incomend. This source will be used for aid payments to

amount of general funds. Environmental progral funds.

very Actvery Actvery Actvery Act

vestment Act (ARRA) directs the federal governluding $280 billion in grants for state and local grecession. The largest component of the prograounting to $288 billion. The five other largest cre and science ($111 billion, including $48.1 billi

(100) - 100 200

Health

Public Safety

her Education

at. Res. & Env.

Others

man Services

-12 Education

$ millions

Growth FY 2011 over FY 2010

General Funds

Page 11

igher educationcause of fundingtax reservelocal schools and human

ent to injectvernments, towill provide

ategories ofn for

300


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transportation), protecting the vulnerable ($81 billion), health care ($59 billion), and education andjob training ($53 billion), and $43 billion for energy-related programs. Planners anticipate that $3.8billion of these funds will flow into Maryland, resulting in the creation of 66,000 jobs over the nexttwo years.

More than two-thirds of the stimulus funds will be used to support Marylands Medicaid programand education (K-12 and higher education). The bulk of these funds will be distributed throughformulas that will permit the state to maintain its recent and planned levels of support to its low-income population in these need categories. The remaining funds will be widely dispersed amongseveral need categories, where the state will generally have somewhat greater autonomy in targetingthe funds within each of these broad areas.

The budget for fiscal 2011 is supported by about $900 million in revenues from the FederalRecovery Act. The budget assumed an additional $389 million from an extension to Recovery Actfunding in the Medicaid program.

Spending AffordabilitySpending AffordabilitySpending AffordabilitySpending Affordability

Spending Affordability is a process set out in Maryland law, whereby a legislative committee annuallyrecommends to the Governor a limit on the amount of growth in the state budget. The Departmentof Legislative Services calculates that, as defined for spending affordability purposes, the proposedbudget decreases by 2.85%. This differs from other calculations of the budget growth rates becausethe spending affordability calculation contains several adjustments to capture ongoing spendingfrom state sources. For example, federal funds, expenditures for construction projects, andpayments to reserve funds are not counted in the spending affordability calculation, but most specialfunds and current-year deficiency appropriations are. The Spending Affordability Committeerecommended no increase on a spending affordability basis: a zero percent growth limit. Theproposed budget is $594 million under the spending affordability guideline.

The spending affordability recommendation is not binding on the Governor or the legislature.However, the legislature tends to use it as a guide in its action on the budget. DLS calculationdiffers slightly from the Governors calculation of -2.90%. The legislature will use DLS calculationin its decision-making process. Given that the proposed budget is far below the recommended limit,the spending affordability process will likely not be a major factor in this years budget deliberations.

State EmploymentState EmploymentState EmploymentState Employment

The bulk of state employees, like the bulk of state expenditures, are concentrated in a few agencies.The 10-campus University System of Maryland, the Department of Public Safety and CorrectionalServices, and the Department of Transportation together employ over half of the state government

workforce.


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February 2010 Regu

The budget provides a netdecreaspositions. The largest numbers oand Department of Assessments

The budget proposes 47 new posilottery terminal operations) and SOctober 2001, the state workforcuniversities).

State employees would not receivbenefits provided in law.

LongLongLongLong----Range ForeRange ForeRange ForeRange Fore

The Governors budget proposal

expenditures, ending with fiscal yforecast shows shortfalls ranging

The forecast shows state general frate is based the expiration of Fegeneral fund spending for educatirequirements for education aid wi

Human

Reseouce

8%

Courts

4%

State Police

3%

Juvenile Services

3%

Pro

FY 20

Total


e of 140 permanent state employees. The budgabolished positions are in the Department of Hnd Taxation.

tions are proposed, mostly in the Lottery Agencyate Police. Since the initiation of the statewide hihas been reduced by 4,800 jobs (excluding colle

a cost-of-living increase, pay steps or deferred c

cascascascastttt

ncludes a five-year forecast of general fund reve

ar 2015. As one-time sources run out after fiscalrom $1.5 billion to $2.5 billion in each year.

und spending for K-12 education growing at 5.6eral Recovery Act funds after 2011. This will incron beginning in 2012. However, beginning in 201ll moderate as video lottery revenue becomes sub

University

System

31%

Public Safety

13%

Transportation

10%

Health

8%

Others

20%

posed State Employment

1 Permanent & Contractual

ull-Time Equivalent = 88,588

Page 13

t abolishes 187man Resources

(to oversee videoing freeze ines and

mpensation

ues and

year 2011, the

. This growthease the need for3, general fundstantial.


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February 2010 Regu

The forecast shows Medicaid grosector of the budget. This also refgrowth in Medicaid expenditures i

Capital BudgetCapital BudgetCapital BudgetCapital Budget

In a separate but related process t

capital budget for fiscal year 2011.expensive assets with a long life.budget is mostly given to other u

The capital budget is funded froindividual agencies to issue bondsoperating budget, the capital budrevenues. These strategies provid

258 2

-3000

-2500

-2000

-1500

-1000

-500

0

500

FY 2010 FY

$Millions

G


ing at an average rate of 17.4%, making it the falects the expiration of federal Recovery Act fundss in the 8% to 9% range.

o the operating budget, the legislature also will ta

The capital budget funds construction projectsnlike most local governments or corporations, tits of government or nonprofit organizations as

a combination of borrowing (by authorizing the) and current-year revenues. In 2011, to provide ret employs bond funds for programs usually funover $400 million of the budget balancing strate

74

-1514

-2147-2226

011 FY 2012 FY 2013 FY 2014

eneral Fund Budget Forecast

Page 14

test growing. Underlying

e action on a

nd othere states capitalrants or loans.

state orelief to theed with currenty.

-2514

FY 2015


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February 2010 Regu

Overall the capital budget totals $This summary focuses on the oth

The items in Natural Resources amillion), and land preservation pr

provides $261 million for local pumillion for the Physical Sciences cmillion for 14 community college

SubjeSubjeSubjeSubject Areasct Areasct Areasct Areas

K-12 Education

Federal federal recovery act fupayments up $9 million cut tK-12 Education includes aid toof Education operations (except f

rehabilitation services, which are iInter-agency Committee for Schoimprovements to aging schools),

Total Budget: $6.7 billiono Decrease from previouo 21% of state budget

Housing

4%

Police, Pu

Sfty, DJS

3%

Health &

Hospitals

2%

Int

Con


3.2 billion. About half, $1.6 billion, is for transpor $1.5 billion.

d Environment are principally water quality programs like Program Open Space ($86 million).

blic school construction. Higher Education projomplex at the University of Maryland College Paprojects.

ds down teacher pensionstudent transportation and

local public schools, State Departmentor child care subsidies and

ncluded in Human Services below), theol Construction (including funding fornd the Maryland School for the Deaf.

s year: $200 million (-2.9%)

Environment

& Nat. Res.

30%

School

Construction

16%

Higher Ed.

21%

b

r-Co

ector

%

Replace special

funds

11%

Other

5%

FY 2011 Capital Budget

(Excluding Transportation)Total = $1.6 Billion

Page 15

rtation projects.

rams ($385he capital budget

cts include $41k, and $81


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February 2010 Regu

General Fund Budget: $5.3o Decrease from previou

Highlights and Lowlighto $156 million in feder

deprived children anis not available in 20

o Direct aid goes dowKent and Prince Ge

o State payment for teo The budget assumes

(the school bus for

Special Effectso Deficiency Appropri

proposed deficiencyis for costs associatefederal funding whic

o Budget reconciliatio A transfer of

applied towabudget balanfunds. Thisfiscal 2012.

The budget rfrom the Agi

0

Direct Aid to local

schools

Teachers' retirement

payment

Other


billions year: -$346 million (-6.4%)

al Recovery Act funds for Title I programs ford $107 million for educating students with disabil11.

for 5 of the states 24 school districts: Allegany,rges

chers retirement increases $93 millionthe passage of legislation to reduce student transula) by $4.3 million.

ations the Department of Education has $20 mappropriations for fiscal year 2009. $10.7 millionwith the Maryland school assessment program.

h has become available since the budgets origina

items

$350 million from local income tax accounting rrds direct aid to local schools a major piece of tcing strategy. This transfer will replace an equal ane-time action will generate a substantial hole

econciliation bill would eliminate all $6 million inng Schools program, to be replaced with state bo

1 2 3 4 5

$ Billions

FY 2010

FY 2011

Page 16

educationallyities in fiscal 2010

Carroll, Garrett,

ortation aid

illion ofin general funds$8.25 million ispassage.

serves would bee fiscal 2011ount of general

n the budget for

general fundsd proceeds.

6


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February 2010 Regu

The budget rtransportatio

Capital Budgeto Over $260 million f

Higher Education

Flat funding from the state 3private collegesHigher Education includes all tand colleges: both from their statother sources of the colleges ownscholarships, aid to community cuniversities, and the operations ofCommission.

Total Budget: $5.2 billiono Increase over previouso 16% of state budget

General Fund Budget: $1.6o Increase over previouso This increase will be wi

furloughs and other sta

Highlights and lowlightso In-state tuition to in

0.0

State inst's - state

funding

State inst's - other

sources

Scholarships

Community colleges

Private inst's

MHEC admin.


econciliation bill would cut $4.3 million from stun aid.

r local school construction.

tuition growth cuts in aid to

e expenses of the state universitiesappropriations and from tuition andrevenue. It also includes statelleges and private colleges andthe Maryland Higher Education

year: $125 million (2.5%)

billionyear: $12 million (0.8%)ped out once higher education agencies are alloctewide reductions.

rease 3%.

1.0 2.0 3.0

$ Billions

FY 2010

FY 2011

Page 17

ent

ted their share of

4.0


21/36


o In addition to the 3% in-state tuition, fees will increase to produce cost increases of upto 5% at most campuses.

o Enrollment at state institutions to grow by only 1/3 of 1% to 128,000.o Student financial aid is reduced $2 million. Tolbert scholarships, for students at

private career schools, will be eliminated. Funding for the distinguished scholar

program will be reduced by $1.05 million, a 25% cut. Overall, the state will award about6000 fewer scholarships.o Aid to private colleges and universities is reduced to $30 million, $8 million below the

amount for the current year and $22 million less than the amount specified by the legalfunding formula.

o Direct aid to community colleges is approximately flat-funded with current amount(after accounting for mid-year cuts). This is $23 million below the amount specified bythe legal funding formula.

Special Effectso Deficiency Appropriations

There is a net transfer of $39 million from state general funds to federalRecovery Act funds.

o Budget reconciliation items Reduces aid to private universities and colleges to $30 million, saving $22

million. Holds direct aid to community colleges at FY 2009 levels, saving $23 million.

Capital Budgeto $352 million for Higher Education Projects, including:o University System of Maryland $226 million

$41 million for UM College Park new Physical Sciences complex. $38 million for Towson new College of Liberal Arts complex. $37 million for UM Baltimore County new performing arts and humanities

building. $37 million for University of Baltimore new Law School building.

o Morgan State University $34 million $30 million for new Center for Built Environment and Infrastructure Studies.

o Community Colleges $81 million 17 projects at 12 community colleges. $16 million for Montgomery College Germantown Bioscience Center. $9 million for Howard Community College new allied health building. $9 for Woc-Wic Tech Community College for its allied health building

o Private Colleges and Universities $4 million Shared among 3 projects at Goucher College, Stevenson University, and Hood

College.


22/36

February 2010 Regu

Health

Increases reflect increases inHealth consists mostly of the stHygiene (DHMH). DHMH incluand Maryland Childrens Health I

income residents, state institutionhealth and developmental disabilidepartments, and treatment and sabuse, and other health-related princludes the Maryland VeteransMaryland Medical Systems, and tMaryland Health Insurance Progr


General Fund Budget: $3.2o Increase from previous

Highlights and lowlightso Virtually the whole i

Medicaid and Childro The budget assumeso No cuts to Medicaid

hospitals, nursing hoproviders.

o Other reductions octobacco cessation pr


0 1

Medicaid & M-CHIP

Mental Health

Dev. Disabilities

Other DHMH

Other Health


edicaid enrollment and other health needsate Department of Health and Mentaldes the Medicaid Medical Assistancesurance (M-CHIP) programs for low-

and community services for mentalies, public health and aid to local healthstem planning for AIDS, substance

oblems. The health category alsoome, state aid for the University ofo programs in the Maryland Insurance Administ

am (MHIP) and Rate Stabilization Fund.


billionyear: -$234 million (-6.2%)

crease in the health budget is accounted for by iens Health enrollment and costs.$389 million in extra federal assistance for the M

or Childrens Health eligibility. Provider rates remes, Managed Care Organizations (MCOs), and

ur in local health department funding, substanceograms and cancer research funding.

ations

2 3 4 5 6$ Billions

FY 2010

FY 2011

Page 19

ation: the

creases in

dicaid program.

uced forcommunity

abuse treatment,

7


23/36


$350 million to support higher than expected Medicaid enrollment and costs.$215 million of the $350 million is Federal funds, including $41 million inRecovery Act funding.

$87 million in state general and special funds for Medicaid to replace fiscal 2010reductions made by the legislature and Board of Public Works.

oBudget reconciliation items

Authorizes $7 million in transfers from health-related special fund balances tothe general fund. Included are $2.1 million from the Spinal Cord InjuryResearch Trust Fund, $1.8 million from the Community Health ResourcesFund, and $1.5 million from the Board of Physicians, among others.

$17 million from increases in nursing facilities assessment fees. $9 million in savings in Medicaid contingent on legislation relating to false

claims. An additional $8 million in cigarette settlement funds authorized to help fund

the Medicaid program, for a total of $112 million 2/3 of the whole amount ofcigarette settlement funds.

Capital Budgeto $38 million for Health and Hospital projects, including:o $7.9 million for 9 community health-related facilities such as mental health services,

developmental disability services, primary care clinics, and adult day care.o $7.5 million for Johns Hopkins Medicine pediatric trauma care center and

cardiovascular and critical care tower.o $5 million for 7 projects for community hospitals.o $3.2 million for projects at federally qualified health center.

Transportation

Highway construction and local transportation aid cut in response to reduced transportation

revenues and to help the general fund budget.

Transportation consists of the Maryland Department ofTransportation. The Department includes the state highwayprogram, mass transit, BWI Thurgood Marshall Airport, thePort of Baltimore and local aid for transportation programs.

The Department of Transportation operates entirely onspecial funds dedicated to transportation, and federal funds.A share of the state sales tax is dedicated to Transportation

beginning in fiscal year 2009, in addition to theDepartments traditional sources, such as gas tax and vehicle

title fees. Also unlike other state agencies, the Departmentof Transportations budget includes the expenditure of bond funds issued by the Department for

construction projects.

Total Budget: $3.4 billiono Decrease from previous year: -$88 million (-2.5%)o 10% of state budget


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February 2010 Regu

Highlights and Lowlighto Gas tax, vehicle titli

in a recessionary ecoo Highway constructio

federal aid, and theo Local highway aid is

continues reductionsfiscal 2010.

o Transit operation an Special Effects

o Deficiency Appropri None.

oBudget reconciliatio Transfers $1

fund. Shifts $30 mi

highway projill still be p

Capital Budgeto $713 million for hig

improvements in Fraround the National

o In fiscal year 2011, aInter-County Connecounties. This spenis not technically par originally slated toof state bond sales.

o $468 million in transLine transit project iWashington.

0

Highway construction

Transit operation

Local aid

Transit const. & equip.

Airport

Port

Highway maint

Debt service

Other transportation


g tax and federal transportation funds continue t

nomy.n is much reduced, in response to revenue downhasing out of federal recovery Act funding.cut to 10% of its statutory level for most jurisdicapproved in the 2009 session and the Board of

construction and debt service payments show n

ations

items0 million from local transportation aid funds to

llion in general fund payments for the Inter-Couect from fiscal year 2011 to 2012. In fiscal year 2aid toward the project from state bond proceeds.

way construction includes $16 million for Interstderick County and $17 million to complete for inNaval medical Center in Montgomery County.

estimated $6oo million will be expended on thector (ICC) highway project in Montgomery and Ping is budgeted in the Maryland Transportationt of the state Department of Transportation budcome from state general funds ill come instea

it improvements include $54 million for engineerithe Baltimore area and the Purple Line in metro

200 400 600 800

$ Millions

FY 2010

FY 2011

Page 21

perform poorly

urns, reduced

ions. Thisublic Works in

otable increases.

he state general

ty Connector11, $126 million

ate 70tersections

$2.6 billionrince Georgesuthority, whichet. $127 milliond from proceeds

ng of the Redpolitan

1000


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February 2010 Regu

Human Services

Increases for food stamps, eneservice offices.Human Services includes progrlocal Departments of Social Servi

this category, we also include chilDepartment of Education, familyInteragency Fund, and the Goverof Aging and Department of Disa


General Fund Budget: $61o Decrease from previou

Highlights and lowlightso Federal food stamp

Assistance Program)the economic recessi

o Home energy assistatemporary Recovery

o An $80 million reduthe Temporary Assis

o The budget includesResources operatin


$19 million iDisability As

0

Assistance payments

Food Stamps

Foster care

Local child welfare

Local family

Home energy

Other DHR

Child care

Rehab. Services

Other human services


gy assistance - Jobs cut in already-understa

ams operated by the Department of Human Resoes, including public assistance, foster care, and c

care subsidies, rehabilitative services provided thand childrens services funded through the Childors Office for Children and programs funded b

bilities.


millions year: -$80 million (12.8%)

funding (now known officially as the Supplemeincreases $189 million, reflecting increased caselon and Recovery Act funding.ce programs decrease $30 million, reflecting the

Act funding.tion in general funds largely reflects accounting c

tance for needy Families (TANF) program.$7 million in undetermined cuts from the Departprograms.

ationsstate general funds for assistance payments in t

sistance (TDAP) program. Caseloads have increa

200 400 600

$ Millions

FY 2010FY 2011

Page 22

fed social

urces (DHR) andild welfare. In

rough the Stateens Cabinetthe Department

tal Nutritionads spurred by

expiration of

hanges related to

ment of Human

e Temporaryed from about

800


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February 2010 Regu

13,000 recipi38% increas

$64 million fmillion is spe

The Departcommunity s

The Departgets $7.9 mil

o Budget reconciliatio None.

Public Safety

Prisons and police see modestPublic Safety includes the DepaDepartment of State Police (DSP)the state prisons and the Baltimor

system. DJS includes case managefacilities for delinquent youth co


General Fund Budget: $1.5o Increase over previous

Highlights and Lowlighto Corrections instituti

in personnel expenso The administration i

There may be an imare added.

o Expenses for medic

0 2

Correctional

institutions

Parole & Probation

Other DPSCS

State Police

Juvenile Services


ents in July 2008 to nearly 18,000 in December 2.or home energy assistance. $40 million is federalcial funds from greenhouse gas license auction pent of Aging gets $3 .3 million in additional fede

ervices.ent of Education Division of Rehabilitation Seion for rehabilitation services for disabled indiviitems

rowthrtment of Public Safety and Correctional Servicesand the Department of Juvenile Services (DJS).

e City Detention Center and the states adult par

ment, community supervision, juvenile detentionmitted by the courts.


billionyear: $19 million (1.1%)

ns increase $22 million (about 3%); principally res.tends to save $3.6 million in overtime in correctiact on security staffing as no new correctional of

l care for inmates total $159 million, an increase

0 400 600 800 1000

$ Millions

FY 2010

FY 2011

Page 23

09 more than a

unding, and $24oceeds.ral funding for

rvices (DORS)uals.

(DPSCS), theDPSCS operatesle and probation

and residential

flecting increases

onal institutions.ficer positions

f $7 million.

1200


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o The budget would eliminate at least 383 positions in Public Safety, 25 in JuvenileServices and 21 in State Police.

o The budget adds 10 troopers for the Maryland State Police.o State Police vehicle replacement, equipment and travel costs are reduced by $3.5

million.


Juvenile Services: $6 million including staff overtime, payments for privateproviders, and to offset an overestimate of federal funding in the currentbudget.

o Public Safety and Correctional Services: $16 million including staffing costs, andinmate medical care. $570,000 in federal recovery Act funds will go towards victimcompensation payments.

o Budget reconciliation items None.

Capital Budgeto $18 million for DPSCS, mostly for a 180-bed youth detention center in Baltimore City,

for minors who are under the jurisdiction of the adult Division of Corrections.o $23 million for 3 local jail projects.o $5.5 million is included for work on a minimum-security addition to St. Marys

Countys local detention center.o $2.5 million for State Police to complete the new barracks and garage in Hagerstown.o $4.7 million for Juvenile Services for land acquisition and design of a new 48-bed

detention center for youth from Anne Arundel County and southern Maryland.

Natural Resources and Environment

Water Quality Programs IncreaseNatural Resources and Environment includes the Department of Natural Resources (DNR) andMaryland Department of the Environment (MDE). DNR includes the state park and forestoperations, Program Open Space land preservation program, and the Natural Resources Police.MDE includes programs that monitor and regulate air and water quality and hazardous substances,and provide assistance to business and communities in controllingpollutions.

Total Budget: $493 milliono Decrease from previous year: -$181 million (-27%)o 2% of state budget.

General Fund Budget: $86 milliono Decrease from previous year: -$5 million (-5.5%)

Highlights and Lowlightso Funding for water quality projects falls $164 million as temporary federal Recovery Act

funding lapses.o Program Open Space, Marylands signature program for preservation of land for

environmental and recreational purposes is normally funded from state real estatetransfer payments. With the downturn in the housing market, this dedicated revenue


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source has been severely reduced. In fiscal year 2011, the budget provides state $70million in bond proceeds to replace the transfer tax funds.

o The budget provides $20 million for the Chesapeake Bay 2010 Trust Fund for projectsto reduce pollution. Although the Fund was targeted to provide $50 million annually, itreceived only $10 million in fiscal year 2009 and $8 million in 2010.


Department of Natural Resources: $1.8 million. $550,000 in federal funds forcontrolling the spread of invasive species. $810,000 in special funds for non-point source pollution control, and $254,000 in special funds for the ForestBrigade program, which involves correctional inmates in reforestationprojects.

o Budget reconciliation items Fund transfers: $577 million in environment-related special funds and capital

programs.

Capital Budgeto $478 million for environmental programs in the largest component of the capital

budget.o MDE includes $384 million in water quality programs.o Program Open Space and other land preservation programs total $86 million. Funding

for these programs peaked at over $360 million in fiscal year 2007.o Maintenance and improvement projects at parks and forests total $19 million


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Budget ProcessBudget ProcessBudget ProcessBudget Process

The state constitution requires a balanced budget.o The Governor must present a balanced budget to the legislature and the legislature

must enact a balanced budget. Maryland is the only state where the legislature, in most cases, cannot add to the budget

proposed by the Governor.o The legislature may reduce the amounts proposed by the Governor, and may restrict

the use of funds.

The House of Delegates and Senate take turns each year in initiating action on the budgetbill.o This year, it is the Senates turn to take action first.

The budget is referred to the Senate Budget and Taxation Committee and the HouseCommittee on Appropriations.

The Governor may propose any number of supplemental budgets after introducing theinitial budget and before the legislature takes final action.o The balanced budget requirement applies to proposed supplemental budgets.

The budget bill becomes law upon passage by both houses of the legislature. It does notrequire the Governors signature.o There is no veto power or item veto of the budget bill.

If the budget is not passed by the 90th day of the session (April 5 this year), the Governorproclaims an extended session and no other business may be conducted except tocomplete action on the budget.

The capital budget (bond authorizations) is a completely different process from theoperating budget.o The legislature has much more flexibility with the capital budget.


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Timetable

Marylands budget process is a year-round activity. The budget process for fiscal year 2011 began inthe summer of 2009. The following chart summarizes the budget timetable.

Executive Branch Legislative BranchSummer 2009 Department of Budget and

Management (DBM) sendsbudget instructions andrequest targets to agencies.Agencies prepare budgetrequests.

Special studies and oversightactivities

August September Agencies submit budgetrequests to DBM.

Fall DBM, the Governor, andGovernors staff meets with

agencies to review budgetrequests.

Spending AffordabilityCommittee meets to review

state economy and finances.Department of LegislativeServices (DLS) preparesbaseline budget forforecasting and comparisonpurposes.

December Board of Revenue Estimatesissues official revenueestimates.Governor makes final budgetdecisions.DBM prepares budget forprinting.

Spending AffordabilityCommittee issuesrecommendation.As budgets are finalized,DLS begins review andanalysis.

January 20 (8th day oflegislative session)

Governor submits balancedbudget to legislature


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Executive Branch Legislative Branch January - March State agencies and DBM

respond to issues andrecommendations from DLSanalysis and answer

legislators questions aboutbudget and programs.Governor may introducesupplemental budgets.

DLS completes detailedanalysis of each agencybudget.Senate and House

Subcommittees holdhearings.Subcommittees andcommittees make decisionson budget actions.Committees reportrecommendations to theSenate and House. EachHouse passes its version ofthe budget. A conferencecommittee of Senators andDelegates resolvedifferences.

April 5 (83rd day of session) Constitutional target for finallegislative action onoperating budget.

April 12 (90th day of session) Final day of regular session.If the budget is not passedby this date the Governorproclaims an extendedsession and no otherbusiness may be conductedexcept to complete action on

the budget. April-June DBM revises detailed data to

reflect legislative action.Comptroller sets up statesaccounts for new fiscal year.

Budget Committees issueJoint Chairmens Report(JCR), which explainslegislative action andrequests various reports andother information from stateagencies.

July 1 Fiscal year 2011 begins June 30, 2010 Fiscal year 2011 ends


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Budget GlossaryBudget GlossaryBudget GlossaryBudget Glossary

Appropriation A legal authorization to expend government funds.

Allowance A budget amount proposed by the Governor for the legislatures consideration. Inmost cases, the legislature may reduce but may not add to the allowance.

Budget A spending plan including sources and uses of funds.

Capital Budget The plan of proposed expenditures for construction projects, purchase of realproperty and major equipment, and other long-lasting assets. In Maryland State Government, anitem usually must cost at least $100,000 and have a useful life of 15 years to be considered a capitalitem. The state may issue bonds to borrow funds to finance capital items.

Budget Reconciliation and Financing Act (BRFA) Separate legislation considered in

conjunction with the budget to make changes in statutes to permit adjustments in appropriations orto help finance expenditures. BRFA provisions may authorize the transfer of dedicated fundbalances to the general fund, reduce the amounts of funding mandates, or allow dedicated funds tobe used for new purposes, for example.

Deficiency Appropriation An amount included in the budget bill to supplement theappropriation for the current year. Deficiency appropriations are typically used to provide funds forprograms that are projected to exceed their budget estimates, or to authorize the expenditure offederal or special funds that were underestimated at the time the original budget was enacted. Thefiscal year 2010 budget bill includes deficiency appropriations for fiscal year 2009.

Federal Fund (FF) Amounts paid to the State by the federal government, almost always forspecific uses. Federal aid for Medicaid and transportation projects are two large examples.

Fiscal Year (FY) The time period a budget is in effect. The state budgets and accounts for itsfinances using a fiscal year that begins July 1 and ends June 30. It is named for the calendar yearin which it ends. Thus we are now in fiscal year 2009, which began July 1, 2008 and will end June30, 2009. The legislature is considering the budget for fiscal year 2010, which begins July 1, 2009.

General Fund (GF) -The monies available for the state to use for most of its functions withoutrestrictions. They come mostly from income and sales taxes. General funds do not includepayments to the state from the federal government (federal funds), or fund sources that arerestricted for specific purposes, like transportation or environmental programs (special funds).

Higher Education Fund The state colleges and universities use a different set of fund namesfrom other agencies. Higher education funds are divided into current unrestricted (CUF) andcurrent restricted (CRF). Current Unrestricted Funds are most of the institutions revenuesources. They include the state appropriation, tuition and student fees, and revenues from residencehalls, dining services, and athletics. Current Restricted Funds are those whose use is restricted bylaw or by the donor. It is mostly research grants, and donations made for specified purposes.


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Useful WebsitesUseful WebsitesUseful WebsitesUseful Websites

Department of Budget and Management

www.dbm.state.md.us

Click on Public then Budget for: Official budget documents Agency testimony at budget hearings Fiscal Digest - information on final budget after enactment

Maryland General Assembly

www.mlis.state.md.usClick on Budget Documents for:

Budget Bill Fiscal Briefing

Budget Analyses Joint Chairmens Reports

Click on Hearing Schedule for:

Budget hearing schedule.Governor of Maryland

www.gov.state.md.us

Press releases Information on Governors initiatives State-State Information

Comptroller of Marylandwww.comp.state.md.usUnder News and Publications, click on Financial Reports for:

Official Revenue EstimatesMaryland.gov

www.maryland.gov

Official State Web SiteMaryland State Archives - Maryland Manual

http://www.msa.md.govClick on Maryland Manual On-Line for:

General Information on state agencies and officialsMaryland Budget and Tax Policy Institute

www.marylandpolicy.org

Accurate, timely and useful information regarding Marylands budget, its state programs,and their effects on regular persons.


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SourcesSourcesSourcesSources

Bureau of Revenue Estimates. Report of the Maryland Board of Revenue Estimates on EstimatedMaryland Revenues Fiscal Years Ending June 30, 2009 and June 30, 2010. December2009.

Department of Budget and Management. Maryland Budget Highlights, Maryland budget Books,Volumes 1-3, FY 2011. January 20, 2010.

Department of Legislative Services. Fiscal Briefing. January 25, 2010.

Department of Legislative Services. Analysis of the FY 2011 Maryland Executive Budget (variousheadings). January, February 2009.http://mlis.state.md.us/2009RS/budget_docs/All/Operating/operating_analysis_doc.htm

Department of Legislative Services.Marylands Budget Process: Legislative Handbook Series Volume IV2006,Annapolis: Department of Legislative Services.