Where the Senate and the Governor Differ on the Budget

The biggest disagreement between the Maryland Senate and Gov. Larry Hogan over this year’s budget is over whether to help more people keep their jobs and to invest in the state’s future versus adding more money to the state’s already-flush reserves.

The Senate version of the budget makes more public investment in capital projects, such as updating aging buildings. It also provides help to school districts dealing with higher-than-expected teacher retirement costs, increases reimbursement rates for physicians who serve Medicaid patients, and saves the jobs of 100 Marylanders at the Springfield Hospital Center, who the governor wants to replace with a private contractor.

All of these moves would help people, whether they are students whose education might be jeopardized if their schools have to make cuts, people who would find health care harder to get if fewer doctors accept Medicaid patients, or the struggling seniors whose monthly food assistance benefit would go up to $30 from the current $16.

In total, the Senate set aside $132.6 million for its legislative priorities. It found the money mainly by putting less into the state’s Rainy Day Fund, which sets funds aside for emergencies. The Rainy Day Fund still has a healthy balance and would remain at required levels; Gov. Hogan’s plan set aside more than he had to in reserve funds.

The state budget bill that cleared the Senate last week made minimal changes to Governor Hogan’s proposed spending plan for the fiscal year that starts July 1. The governor has spoken out against the practice of the legislature trying to set aside funding for its own priorities, one of the few legislative maneuvers senators have to influence the budget. He urged the General Assembly not to take such action this year.

The Senate also felt it had more money to appropriate by anticipating a smaller decline in revenues than the governor. That’s because he called for a tax cut the Senate opposes. However, the Senate Budget and Tax Committee later advanced its own tax cut that will cost an estimated $86 million next year, similar in cost to the governor’s tax cut proposals. The Senate tax plan, which disproportionately benefits wealthy Marylanders, was approved after the budget amendments, so the budget may need to be further adjusted in the House to reflect those costs – if the House agrees to the Senate’s ill-advised, pricey tax cut plan.

The House Appropriations Committee has made its own amendments to the budget and that bill is awaiting final passage. Any differences between the House and Senate bill will be resolved in conference committee, followed by re-votes in both chambers. The General Assembly has until April 4 to pass a budget.