Hogan refuses to spend $80 million lawmakers provided with strings attached

With state revenue lagging behind projections, Gov. Larry Hogan's budget chief said Wednesday the governor would not spend $80 million the General Assembly authorized him to use this year to reduce violence, renovate older schools and fund other programs.

Budget Secretary David R. Brinkley said, it would be "shortsighted" to spend money that should go into the state's savings account.


The legislature's chief budget analyst estimated revenue to be $150 million short of projections.

Brinkley was asked whether the lagging revenue has reduced the likelihood that taxes will be cut when the legislature meets next year.


"We have to deal with [tax cuts] as a long-term goal," he said. "Right now we're dealing with short-term challenges."

Brinkley said the state needs to take a "defensive posture" to guard against volatility in state revenues.

A budget department spokesman, Eric Shirk, later said it would be "incorrect" to interpret Brinkley's comments as ruling out tax relief next year.

"Secretary Brinkley was merely commenting that the decisions on the fenced-off funding are an immediate 'right now' decision, versus any decisions being made for the next legislative session," he said. "The decisions for next session will ultimately be made by the governor."


When the budget was adopted this spring, officials projected a $360 million surplus. The administration has not released a new estimate.

Warren Deschenaux, executive director of the Department of Legislative Services, said the apparent shortfall makes it "challenging" to cut taxes.

"If we're looking at something in the hundreds of millions of dollars, it's going to be difficult to accommodate in our forecast," he said.

The administration's decision to not spend the $80 million set aside by lawmakers — Hogan's choice was to spend all or none of it — sets up a confrontation with the Democratic-led legislature, which in recent years has tried to force spending on programs it prefers by redirecting money from the governor's budget proposal.

Under the Maryland Constitution, the legislature cannot add spending to the governor's budget — it can only cut money and request that it be spent elsewhere.

A spokesman for Hogan criticized the legislature's approach.

"Governor Hogan has repeatedly said he would not play politics with budget items and that the legislature's tactic of fencing off dollars for critical programs like public safety, lead remediation, addiction services and state highway funding are the kinds of stunts that Marylanders have come to resent," spokesman Matthew A. Clark said.

Clark said the dispute could have been avoided had the legislature engaged in "frank conversation" instead of "resorting to self-admitted political tricks."

Of $173 million the legislature left to the governor's discretion, Brinkley said the administration would spend about $75 million, mostly for infrastructure. That doesn't include any of the $80 million lawmakers "fenced off," prohibiting the governor from spending any amount if he didn't spend the entire amount.

The legislature's Democratic leaders said it was Hogan who refused to compromise. They pointed to bipartisan approval of the budget in the House of Delegates and state Senate.

Senate President Thomas V. Mike Miller called Hogan's decision to withhold the money "all politics" and defended the legislature's prerogatives.

"The legislature has a role. There are three branches of government," Miller said. "For the governor to continue to ignore that is an affront to the constitutional process and the role the General Assembly has to play."

House Speaker Michael E. Busch said the practice of fencing off certain money was not a tactic but "a part of the legislative process."

He pointed to the governor's decision not to spend $6.1 million for the state's Aging Schools Program at a time when he has criticized Baltimore city and county for not installing air conditioning quickly enough.

The program is intended for projects in the $10,000 to $300,000 range — which can including heating and air-conditioning projects — though such projects do not make up a majority of the program's spending.

"After all the criticism of air-conditioning in schools, that the governor would withhold money for Aging Schools, which is used for that, defies logic," he said.

Brinkley said the administration would look for a way to make up for money withheld from that program, but offered no guarantees.

The $80 million set aside by lawmakers accounts for less than one-tenth of 1 percent of the state's $42 billion budget. But each of the programs it would fund has passionate supporters.

Among the money that will not be released is $19 million the legislature directed toward helping most of the state's local school systems cover the cost of employee pensions.

Sen. Richard Madaleno, vice chairman of the Senate Budget & Taxation Committee, objected to the school spending decisions. The Montgomery County Democrat noted that the state will still spend $5 million on scholarships to private schools.

"Once again, the governor is deciding to withhold money from our public schools, and this year he is doing it while giving a large handout to our private schools," he said.

$1 million that lawmakers intended for Baltimore's Safe Streets program to reduce violence also did not make the cut.

Dr. Leana S. Wen, Baltimore's health commissioner, said program workers mediated 800 disputes in 2014. She said 80 percent of them could have escalated to gun violence.

"This is effectively a death sentence for our life-saving program," she said. Wen said Hogan's decision would hold up $500,000 intended to reduce infant mortality in Baltimore.

Also being withheld is $1 million to supplement food stamp benefits for 18,000 low-income Marylanders over 62. More than 6,500 of them live in Baltimore city and county.

The administration said it would try to shift money around to find about half of the $80 million. That includes such proposed expenditures as $9.2 million to build a Public Safety Communication System to improve police and fire communications in emergencies, $6 million to prevent pollution from farms and $15 million to repair state buildings.

Deschenaux said those three programs will likely have to be delayed until next summer. But Shirk, Brinkley's spokesman, said the administration hopes to find ways to avoid slowing the projects.

Brinkley said the administration will find a way to give physicians who treat Medicaid patients half a loaf in their effort to bring reimbursements up to the same level as Medicare.

They now stand at 92 percent of the Medicare rate. The legislature wanted to spend $14 million to raise that to 96 percent. The administration plans to shift $7 million within the budget of the state Department of Health and Mental Hygiene to raise it to 94 percent.

Gene Ransom, chief executive of the state medical society, praised Hogan's decision.


"That's a high-priority item for us. The governor seems to understand and appreciate that," he said.


Miller and Busch said the governor's decision to withhold education money could jeopardize the administration's request for a $20 million loan — which could turn into a grant — to encourage Northrop Grumman Corp. to keep jobs in Maryland.

That loan requires the approval of a joint legislative committee chaired by Miller and Busch, who this spring supported the administration's proposed legislation to aid the company.

"It makes it much more difficult to get it approved," Miller said.


Hogan's spending decisions

The governor will fund some programs financed with money the legislature restricted, but won't fund others. For some programs, he intends to move money around in his budget to fund them.

To be financed

•$46.2 million for capital projects

•$22 million for road improvements for possible FBI headquarters site in Greenbelt

•$5 million for scholarships to private schools

To be withheld

•$19 million to help local governments with teacher pension costs

•$6.6 million for demolition at the closed Baltimore City Detention Center

•$6.1 million for the Aging Schools Program

To be shifted

•$15 million for repairing state-owned buildings

•$9.2 million to build a Public Safety Communication System to improve police and fire department emergency communications

•$6 million for projects to prevent nutrient runoff into the Chesapeake Bay