OCEAN CITY — As the state prepares for budget season, Democratic Gov. Wes Moore told county and city officials at the Maryland Association of Counties summer conference to expect to tighten their fiscal belts.
“As the old adage goes, ‘When the state catches a cold, local jurisdictions catch the flu,’” Moore said Saturday at his first counties’ conference as governor. “So it won’t be a surprise when I tell you that we’re facing budget shortfalls.”
The governor, who received much applause in spite of his message of troubling news, emphasized partnership between the statewide executive branch and local governments. He said the state “doesn’t just welcome partnership, we need it,” while noting that officials need to prepare to enter “a new season of challenge for Maryland.”
Moore took the helm seven months ago from Republican Gov. Larry Hogan as Maryland held an impressive budgetary surplus — $5.5 billion, according to Hogan at a December news conference. But federal pandemic dollars have stopped flowing as the nation has begun to move on from the woes the coronavirus brought. That’s left Moore in the position of warning cabinet executives and county officials to anticipate a shorter budgetary leash.
“It’s going to take the discipline of elected officials at the state and local levels, who commit to a spirit of partnership, even as we face some tough decisions ahead,” Moore said. “And yes, It will take the discipline of the governor — whereas I want to say “Yes” … you are going to hear some ‘No’s.’”
In urging restraint in spending as Maryland approaches 2024, the governor said: “This will be a season of discipline, and our choices must reflect that.”
He did not suggest budget cuts or tax increases.
“Our budgets have gotten bigger over time, but our economy has not kept pace,” said Moore. “When I took office, our economy was nearly the same size as it was four years ago. Over the same time period, the economy of Pennsylvania grew by $22 billion.”
“And here’s why that matters,” the governor continued, “because our families feel it.”
In a phone interview, Harford County Executive Bob Cassilly, a Republican, agreed with Moore’s warning to be cautious, saying “we’ve got to be very careful.” Cassilly wasn’t in Ocean City for Moore’s speech; he attended a walk at the same time in Bel Air to honor a woman killed on the Ma & Pa Trail.
“The challenges we’re all facing are largely our of our control,” said Cassilly, noting the end of federal COVID-related money flowing into the state. “It’s the facts, Jack. You’re not gonna have as much money.”
Cecil County Executive Danielle Hornberger, a Republican, also wasn’t present to hear Moore’s remarks, but said in a statement afterward that her county “has taken a purposeful conservative approach.”
”We’re increasing our rainy day funds, planning today for future mandated increases, and creating a business-friendly environment focused on establishing great job opportunities for future generations,” said Hornberger.
In Moore’s speech, which wrapped up the four-day convention in Ocean City, the governor also said he plans to appoint a chief performance officer to monitor government spending efficiency at the state and local levels. A May job posting listed the position’s annual salary range at $126,635 to $153,314.
Though Moore is a nascent politician, the former entrepreneur and nonprofit CEO made a point of saying he was no newcomer to balancing budgets.
He said that the Department of Legislative Services, a nonpartisan state agency, has forecast structural budget deficits for half a decade.
“Those projections were made under the last administration, not this one. Those are their numbers, not mine,” Moore explained. “The trouble beneath the surface was masked by federal cash and big stock gains during COVID.”
In June, the legislative analysts also said the state’s annual budget for fiscal 2024 is projected to end with a fund balance of $367 million and ongoing revenues that exceed ongoing spending by $150 million. But they said the state could see a $418 million structural deficit for fiscal 2025, and a $1.8 billion deficit in fiscal 2028.
Other state officials have forecast stormy fiscal weather, too. The Maryland Board of Revenue Estimates in March predicted the state would collect $400 million less for the 2024 fiscal year compared to the most recent prior projections. The change followed a similar December announcement, when the board began lowering expectations because of slower economic growth.
Moore acknowledged that the fiscal surplus stemming from federal COVID relief the state experienced under the last few years of the Hogan administration would not last forever.
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“It’s what I said before I became governor,” Moore said. “In fact, I said it the last time I spoke before this body, during winter MACo, as governor-elect. I said it when I unveiled my first budget. I have been saying it for the last seven months.”
Moore took time to highlight a handful of his first financial decisions as governor, including increased aid to local governments, transit and workforce investments and his successful push to fast-track the increase of Maryland’s minimum wage to $15 an hour starting Jan. 1. That’s a year earlier than it was previously set to go into effect.
“These investments will build new avenues of growth and create new pathways to prosperity,” he said. “And we proved that we can do big things while being fiscally disciplined because — do not forget — we did all this while keeping $2.5 billion in the Rainy Day Fund.”
The governor also said the state needed to do more to help an economy that hasn’t reached its potential.
“As a result, our fiscal health is falling behind, and our ability to meet the full needs of our people is hampered. Put simply: Our economic engine does not support our ambition. Of the last 20 state budgets in Maryland, 17 have needed cuts to stay balanced.”
Without offering specifics, he pledged that Maryland can build “a dynamic economy.” He praised the development of states such as Kentucky, with its electric vehicle battery production, and Massachusetts with its biotech industry.
“We can be a state where our finances support our ambition,” the governor said. “We can be a state that unleashes a new wave of dynamism by harnessing the great assets we already have — and getting them moving in the same direction.”