Maryland expects big budget surplus

Erin Cox
Contact ReporterThe Baltimore Sun
Senate President Miller to Governor Hogan: 'Give the money back to the children.'

For the first time in a decade, Maryland expects to begin the budget year with a surplus — and a big one at that.

Democratic legislative leaders announced Monday that the state expects to take in half a billion dollars more than it budgeted this year, and they also foresee another $215 million surplus for next fiscal year.

The extra cash — more than 10 times what lawmakers expected — touched off partisan bickering over the best way to tend to Maryland's finances and renewed a rift between Republican Gov. Larry Hogan and the state's top Democrats.

Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch joined other leaders in urging Hogan to send more money to local school systems.

"Did anyone campaign on the fact they were going to cut education?" Busch asked rhetorically at an Annapolis news conference. "The answer's no. … Kids deserve [the money]. It's there for them to have it. It sits there."

In this year's budget, Hogan reduced funding that Baltimore and some other local school systems had hoped to receive under a formula that sends additional money where it costs more to run schools. The General Assembly set aside $68 million to restore the aid, but Hogan has declined to spend it.

A Hogan spokesman said Monday the governor stands by that decision. "The governor has made up his mind," spokesman Matthew A. Clark said. As for next year, Clark said, Hogan would reveal his spending plans in January when he presents his next budget.

Higher-than-expected income taxes, mostly from capital gains, are the biggest driver of the surplus, said Warren Deschenaux, executive director of the Department of Legislative Services.

Politicians quibbled over what Monday's news foreshadows for future budgets.

The Democrats declared Maryland's "structural deficit" has been closed, saying tough votes to raise taxes over the past eight years put an end to a vexing financial problem where planned spending outpaced revenue every year.

In closing that gap for this year and next, House Appropriations Chair Maggie McIntosh, a Baltimore Democrat, said, "We've done what we promised we were going to do."

Hogan campaigned against those taxes and for putting the state's financial house in order. He disagreed that current surpluses meant an end to structural deficits in the future, though he took credit for improvements in the state's economy.

"Both the business climate and the state's finances are finally improving under Governor Hogan," Clark said in a statement. "There's no question that we are now headed in the right direction, but we must continue to budget cautiously and keep spending under control over the long term."

Hogan said the state is still facing a $1 billion deficit over the next five years, in part because debt payments are expected to become much bigger in the future. Hogan also has said the state needs to do more for its underfunded pension system.

Democrats argue there's enough money both to send a lot more to the pension system and give more to the state's costliest school districts. The legislature has been sparring with Hogan on this point since April, trying to persuade him to release the $68 million. Hogan has said that it would be irresponsible to do that when Maryland should shore up the pension system.

Miller, at times a Hogan ally, for the first time publicly joined other Democrats in asking the governor to spend more on education. Miller said that because of Hogan's policies, some local school systems have had to make cuts that are "absolutely criminal." He cited reductions in pre-K programs in Prince George's County as an example.

"It's up to the governor to do his part and give the money back to the children," Miller said.

Miller said the Maryland Constitution only requires the state to pay for one thing: education. He had refrained from joining previous news conferences calling on Hogan to release more money for schools, but joined the chorus Monday now that there are hundreds of millions more dollars available.

"There is one thing that is paramount," Miller said in an interview. "If you're not doing the thing that is paramount, how can you do the little asides?"

ecox@baltsun.com

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