Maryland’s spending board approved $120 million in spending cuts on Wednesday and warned that deeper cuts will be necessary to cope with the financial fallout of the coronavirus pandemic.
The Board of Public Works signed off on the cuts, which largely involve money that was sitting unused for the budget year that ends on June 30, but also reduces the state’s contribution to the Washington-area Metro system by $35 million.
Combined with federal financial assistance and tapping the state’s Rainy Day Fund, the state should be able to make it to June 30 without further cuts, said David Brinkley, the state budget secretary.
“We have sufficient funds in the Rainy Day Fund to get us to move forward through this year, and to the beginning of next year,” Brinkley said.
But he warned that deeper cuts will be necessary for the next budget year, which begins July 1. That’s when he said the state will need to do some “critical decision making.”
The state is facing the twin financial dilemmas of increased costs for responding to the pandemic and plummeting tax collections as Marylanders lose their jobs and spend less money due to restrictions imposed to limit the spread of the virus.
“We, as a state, will have some very difficult financial decisions to make in the coming weeks and months as we begin to grapple with the fiscal consequences of the coronavirus pandemic to our state,” said Lt. Gov. Boyd Rutherford, a Republican who has chaired board meetings for Gov. Larry Hogan during the pandemic.
Preliminary estimates show the state could collect between $925 million and $1.125 billion less in taxes than expected by the end of June. Losses are predicted to continue, with the state potentially missing out on $4 billion in taxes two years from now.
Rutherford was joined in voting for the spending cuts by the other board members, Comptroller Peter Franchot and Treasurer Nancy Kopp, both Democrats.