Hogan and the fenced-off funds: Just when did the governor get religion on Maryland's budget?

As pressure has mounted for Gov. Larry Hogan to release funds the legislature freed up to support the Baltimore Symphony Orchestra, upgrade Baltimore police technology, provide summer jobs for kids in Baltimore City and Anne Arundel County, build new schools and a variety of other things, his administration has voiced increasing concern about the state of Maryland’s finances. If he chooses not to fund any or all of the $189 million in general fund spending, it could provide a convenient excuse — something along the lines of, “It’s not that I disagree that we ought to be testing rape kits rather than throwing them away, and it’s certainly not that I’m being petty about the Democratic legislature trying to fund its own priorities. Maryland just doesn’t have the money.”

But if Governor Hogan is really worried about the state of Maryland’s finances, it’s an awfully recent development. Until now, he was content to brag about what great shape the budget is in thanks to him.


Here he was on June 4 in a speech to the Maryland Free Enterprise Institute: “The very first budget I submitted eliminated nearly the entire $5.1 billion dollar structural deficit which we inherited. It was the first structurally balanced budget in a decade, and we have continued to pass balanced budgets every single year for five years.”

And then on June 21, he was at it again in a press release announcing a 3% pay raise for state employees starting July 1: “Due to our administration’s prudent fiscal management and a robust economy, we are able to provide another well-deserved cost-of-living increase for state employees.”


Now, the governor is complaining that it would be imprudent to release the $189 million in spending because of a projected deficit of $961 million in fiscal 2021. But when he introduced his fiscal 2020 budget back in January, his own Department of Budget and Management projected a fiscal 2021 deficit of $1.034 billion. His press release back then noted that “The FY 2020 budget continues the Hogan administration’s legacy of fiscal responsibility, adhering to recommendations from the Spending Affordability Committee and maintaining structural balance while making vital investments in education, healthcare, and job creation.”

It seems that a projected shortfall of just under $1 billion is a crisis in Mr. Hogan’s mind when it comes to taking actions the Democrats in the General Assembly want. But a projected deficit of a little more than $1 billion didn’t stop him from pursuing his own policies that would have made matters demonstrably worse. At the same time that Mr. Hogan was proposing his 2020 budget, he also introduced 15 bills with a significant and measurable impact on the state’s fiscal 2021 general fund outlook — some tax cuts, some spending increases for a total of just under $158 million. (The legislature rejected all of them except for $50,000 to help support the Ocean City convention center.)

The Hogan administration points to a Department of Legislative Services calculation of next year’s projected structural deficit as the source of its concern, and notes that the shortfalls rise from $961 million in fiscal 2021 to just over $1.5 billion in fiscal 2024. But this is not news. Despite Mr. Hogan’s assertion that he wiped out Maryland’s perennial imbalance between spending and revenues in his first year in office, projected deficits have been with us since before he got here and will be with us after he’s gone. In fact, this year’s DLS long-term estimate that Mr. Hogan is now so concerned about actually reflects a slight improvement over where things stood a year ago.

Don’t get us wrong, we’re all for having an honest conversation about Maryland’s fiscal health, and we certainly appreciate the administration's assumption that we’re due for a recession sooner or later. Moreover, Maryland does face some real questions about its commitment to funding the Kirwan Commission’s recommendations for transforming the state’s pre-K-12 education system. If Mr. Hogan were holding back these funds as part of a comprehensive plan to pay for Kirwan, that might be understandable (if a bit ironic, in that two-thirds of the money in question is one-time funding for school construction). But we’re not holding our breath.

The bottom line is this: The budget the legislature approved — including that $189 million in fenced off funds — is smaller than the one he submitted in January. If Mr. Hogan has objections to particular spending priorities the legislature has fenced off money for, he should explain them. There are certainly some items on the list we find more worthwhile than others. If he just doesn’t like the legislature monkeying with his budget, he should say so. But we hope he will instead recognize the merit of the legislature’s priorities and release the funds.