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Programs in limbo as Hogan weighs releasing money lawmakers 'fenced off'

State-paid work on schools could halt if Hogan doesn't release money lawmakers set aside for their priorities.

At Prettyboy Elementary School in northern Baltimore County, workers are tearing up worn carpeting and replacing the floor as part of a $200,000 project paid for by Maryland's Aging Schools Program.

All over Maryland, dozens of similar state-financed projects are in the works in public schools, but the program could grind to a halt if Gov. Larry Hogan decides not to release $6.1 million the General Assembly set aside for it in this year's budget.

The money is part of $160 million the legislature "fenced off" in the budget, telling Hogan he may spend the money only for purposes they specified. But under Maryland's strong-executive Constitution, the legislature cannot force the governor to spend the money. He could just add it to the state's roughly $360 million budget surplus.

Some lawmakers believe Hogan is determined to withhold the funds, but spokesman Matthew A. Clark said the governor has yet to decide.

"We're going to look carefully at the items they fenced off," he said. "We are keeping a very close eye on revenues in order to make decisions that match up with fiscal realities."

The decision is part of a broader struggle between the Republican governor and Democratic-dominated legislature over who gets to decide spending priorities in the state's $42 billion operating budget.

The fenced-off money has taken on a political importance larger than its actual effect on state finances.

"That's a tiny, tiny, tiny fraction of the operating budget," said Donald F. Norris, who heads the School of Public Policy at the University of Maryland Baltimore County. "This is all symbolic stuff, and it's political."

Hogan let the July 1 start of the fiscal year pass without announcing a decision. Before this year's legislative session, the governor vowed not to spend fenced-off money, but the committees that craft the budget tried to make it difficult for him to carry out that threat.

The money for aging schools is not spending Hogan opposes. In fact, he allocated that $6.1 million as part of his capital budget.

But a Senate committee moved the money to the operating budget, paying for it with some of the $80 million it trimmed from Hogan's proposed payment to the state's Rainy Day Fund. The $1 billion fund, set aside as a hedge against budget reverses, is still large enough to maintain the state's AAA bond rating, but Hogan wanted to add more.

To prevent the governor from cherry-picking programs, the senators made it an all-or-nothing proposition. The House of Delegates agreed. Now Hogan may choose to spend all $80 million or none of it.

To complicate the governor's decision, the lawmakers put in that basket a mixture of his favored programs and their own.

If he says no, Hogan would deny funding for several of his priorities, including aging schools, a statewide public safety communications system and demolition of part of the Baltimore City Detention Center that Hogan closed.

To free the money, Hogan would have to allow spending on legislative priorities such as helping local school systems with the cost of employee pensions and improving compensation rates for physicians in the Medicaid program.

The Assembly also fenced off $46 million for programs including rental housing, neighborhood revitalization and drinking water projects. And there's another $36 million the legislature cut from Hogan initiatives and directed to other purposes. But none of that money is "all or nothing." Hogan could fund some programs while declining others.

The Aging Schools Program is an example of why Hogan's decisions could be difficult. The program pays for middle-range improvements — usually costing $10,000 to $300,000 — that likely would have to be deferred if local school systems had to pay for them on their own.

For Baltimore — because of its high proportion of old schools — the program if fully funded would bring in almost $1.4 million over the next year, making it the state's largest recipient of such funds. Baltimore County, which also has many older schools, would receive about $875,000, putting it third in the state.

In Baltimore County, the delayed decision is complicating school officials' plans for projects similar to the one at Prettyboy. The program helps pay for projects that fall between routine maintenance and major renovations.

"It fills a niche that is so critical for aging infrastructure, and we would really be at a loss if we don't get those funds," said Pete Dixit, executive director of physical facilities for the county school system.

The association of local schools boards wrote the governor in April urging him to release money for the program. John R. Woolums, government affairs director of the Maryland Association of Boards of Education, said local school systems feel caught in the middle.

"We've never had the Aging Schools Program in jeopardy before," he said. "It has been a painful pill to swallow."

But Woolums said school systems are also sweating the $19 million the legislature wants to offset pension costs.

"Nineteen million would have gone a long way to easing that burden as well," Woolums said. "It would mean a lot to us for the governor to un-fence that funding."

Gene Ransom, chief executive of the state medical society, said physicians are waiting nervously to learn whether they will get $14 million in higher compensation for Medicaid care. He said increased pay is critical to keeping doctors in the program to treat low-income Marylanders.

If doctors drop out, he said, "more and more folks will end up in the emergency room and in the end we'll pay more for that care."

Clark said that while the governor has yet to make up his mind, he opposes the legislature's tactics.

"Taking money from the Rainy Day Fund is a bad idea. It's short-sighted," Clark said. "This all-or-nothing approach for the $80 million is little more than political maneuvering and not sound fiscal policy."

Sen. Richard S. Madaleno Jr., a Montgomery County Democrat, said the majority party adopted its strategy because of the governor's "my way or the highway" approach to the budget.

"He is unwilling to actually negotiate, so we had to use this mechanism to make sure these important projects and programs move forward," said Madaleno, vice chairman of the Senate's budget committee.

Norris said the logical resolution in divided government would be to spend at least the $80 million.

"They give him what he wants, he gives them what they want out of the governor. It's called compromise," he said.

But if Hogan refuses to spend the money, his political base will still be happy, Norris said.

"He will just annoy the heck out of the leadership of the General Assembly," he said. Norris added, "They'll probably take it out on him later."

Or they could do so sooner. Hogan has a $20 million request pending before a legislative committee to award Sunny Day Fund money to Northrop Grumman Corp. A meeting to consider that request had been set for Thursday but has been postponed by legislative leaders.

mdresser@baltsun.com

Spending in limbo

This is some of the money in the $80 million the legislature has fenced off:

Hogan priorities

•--$15 million for repair of state-owned buildings.

•--$9.2 million to build a Public Safety Communication System to let police, fire departments across the state communicate better in emergencies.

•--$6.5 million to demolish buildings Hogan closed at the Baltimore City Detention Center.

•--$6 million for farmers — a key Hogan constituency — to plant cover crops to prevent nutrient runoff into the Chesapeake Bay.

Assembly priorities

•--$19 million to help most of the state's local school systems with the cost of employee pensions.

•--$14 million to increase the rate of reimbursement for physicians under Medicaid to 96 percent of the rate paid under Medicare.

•--$1 million for the Baltimore Health Department's Safe Streets program, which attempts to defuse disputes before they lead to violence.

•--$550,000 for lead remediation in the homes of children treated under Medicaid.

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