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Maryland budget cuts must not harm vulnerable residents | COMMENTARY

The COVID-19 pandemic has been devastating for Marylanders in many ways. Now, state and local governments are feeling the pain, putting at risk the essential public services that keep our communities going, everything from public health and education to transportation and help for our most vulnerable.

Actions necessary to curtail the pandemic have damaged the state’s economy, and that has hurt state and local revenues. As a measure of how sudden and severe the effect has been, the state lost more than 500,000 jobs to date. While many of these jobs will eventually come back, how many and at what pace is unknown.

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State revenues will likely be short about $1 billion just in the current fiscal year that ends June 30, according to the Maryland Bureau of Revenue Estimates. Although forecasting further out is far less certain, the bureau projects losses in the range of $2 billion in fiscal 2021 and $3 billion the following year.

The impact on the state is largely due to dramatically reduced income and sales tax collections. County governments, which rely heavily on income tax revenues, are likewise affected.

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All of which leads to the question of how to respond. If the state must cut the budget, however, let’s do it in a way that will not affect working families and keeps residents moving forward.

So far we have seen only modest budget cuts, with the Board of Public Works approving $121 million in reductions in mid-May with further trims expected this month. State analysts believe the current year budget can largely be balanced by absorbing available surpluses, curtailing hiring and other spending, rolling about $250 million of bills to the next fiscal year, and using additional federal Medicaid matching funds in the first federal stimulus bill.

What happens next is the puzzle to be solved. Fortunately, Maryland has amassed a rainy-day fund balance of $1.15 billion, which can be tapped to maintain state services. Maryland officials are also pushing Congress to provide additional federal assistance to states and localities. But even if that aid does materialize, state leaders may well need to do more to balance the budget for next year.

The Board of Public Works, made up of Gov. Larry Hogan, Comptroller Peter Franchot and Treasurer Nancy Kopp, has the authority to reduce state appropriations by as much as 25%, excluding debt service payments, funding for public schools and employee salaries. The board should use this enormous budgetary power wisely. The Maryland Center on Economic Policy has developed principles that are a smart road map for the board to follow.

Using these principles as a guide, all budget decisions should be designed to protect the most vulnerable Marylanders. Many who have lost jobs or have seen their pay cut are counting on their state and local governments to help support them through this crisis. It is vital that the state maintains full funding for safety net programs and ensures that the state agencies and nonprofits that administer them are able to retain sufficient staff to respond to the increased need for assistance.

The state should also maintain or expand eligibility for federal family income support programs. Maryland must not follow the path of other states to place new restrictions on who can receive emergency food assistance, temporary cash assistance, Medicaid or other forms of family income supports.

Even as we grapple with a drop in expected revenue, we must also continue to invest in Maryland’s future. That includes preserving our funding commitments for public education. The pandemic has exacerbated the existing racial, ethnic and income disparities in our education system. It is vital that our public school systems have the resources they need to address the immediate needs. 

Finally, we must preserve the state’s workforce. Avoiding cuts to our public sector workforce is vital both to maintaining the services Marylanders rely on and to support a robust economic recovery. Cuts to state and local government agencies will just impede our economic recovery.

Clearly avoiding harmful budget cuts will likely require additional federal assistance. But the state should help itself as well. Let’s start with what’s on the table. The legislature should override the governor’s veto of bills that raise revenue via internet advertising, digital downloads and tobacco.

As we await anticipated congressional approval of a new round of relief, the Board of Public Works should hold off on damaging budget cuts. If cuts are ultimately needed, Governor Hogan, Comptroller Franchot and Treasurer Kopp must make smart decisions that protect those at most risk, invest in our future and protect jobs.

Warren Deschenaux (wdeschenaux@gmail.com) is the former executive director of the General Assembly’s Department of Legislative Services and served as the legislature’s chief fiscal analyst. He is a non-resident senior fellow at the Maryland Center on Economic Policy.

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