Maryland Gov. Larry Hogan likes to say that his budgets are always structurally balanced — and, this year, a news release from his office emphasized that his $46.6 billion spending plan is “100 percent structurally balanced.”
Not so fast.
Democratic leaders in the General Assembly say they could be forced to cut Hogan’s proposals after receiving an analysis from the non-partisan Department of Legislative Services that Hogan’s budget is not, in fact, structurally balanced.
“The Administration’s spending plan fails to comply with the [Spending Affordability Committee] recommendation for structural balance,” the report states. “Reductions of $62 million are required for compliance.”
Hogan’s office takes issue with the legislature’s budget analysts, noting the economy is expected to grow at a faster rate — resulting in more tax dollars for the state budget — than the budget's growth.
Hogan’s office argues the budget is structurally balanced because it grew by 3.41 percent compared to last year — less than the cap for recommended growth of 3.75 percent.
“We disagree with their analysis and stand by ours,” said Hogan spokeswoman Amelia Chasse.
At issue is whether to count $75 million in major information technology projects as one-time spending in the budget, as Hogan argues, or as perennial expenses, which is what legislative analysts say the upgrades are.
David Juppe, senior operating budget manager at the Department of Legislative Services, said this year was the first time the Hogan administration attempted to count IT enhancements as a one-time cost.
“They took things out of the calculation to show a structural surplus,” Juppe said. “The governor has introduced a budget he says is structurally balanced. In our view, it’s not.”
State Del. Maggie McIntosh, a Baltimore Democrat who is chair of the Appropriations Committee, said legislators will look for cuts in the coming weeks.
“I’m just afraid that we have to make some cuts in order to get the budget balanced,” McIntosh said. “I’m afraid there’s some overspending. It’s amazing to be in this position. The budget grew bigger and faster than our Spending Affordability Committee wanted.”
Chasse argued the Democratic-controlled legislature and its analysts are making a mistake in assuming the IT projects will be recurring expenses.
"It's not surprising that the idea of a fiscally responsible one-time expenditure is a foreign concept to some legislators, given that over 80% of the budget consists of forced repeat spending mandates that they passed,” she said in an email.