Budget Update: House Restores Some Harmful Cuts

Maryland’s legislative session is a little more than halfway through, which means the Appropriations Committee in the House of Delegates is making decisions about changes to the state’s budget. Last week, the Board of Revenue Estimates further lowered projected revenues by another $33 million due to the federal government’s hiring freeze, which adds to the challenge of meeting Marylanders’ needs.

There are a handful of bills still under consideration that could generate more revenue for the state. However, because the legislature can’t add money to the governor’s budget, Marylanders wouldn’t necessarily see the benefits of better services and shorter waiting lists in the next fiscal year.

K-12 Education

While fully funding core education expenses, Gov. Hogan’s proposed budget cut from several specialty programs aimed at improving student achievement as well as teacher training and retention programs. House lawmakers voted to restore as much funding to these programs as possible and instead cut some of the governor’s proposed new initiatives.

In addition, they voted to restore state support for longer hours at the Enoch Pratt Free Library in Baltimore, a measure that was part of last year’s package of support for the city in response to the 2015 uprising.

• The primary investment in public schools across the state is up $160 million, or 2 percent. This fully funds school aid formulas. However, past failures to adjust for inflation have lowered the bar and the state is at least $1 billion below its currently established standard for “adequate” funding. Our recent report looks at the funding formula challenges in much greater detail. So far, the House has not proposed changes to core school funding.
  • Baltimore City lost $42 million in school aid, reflecting disparities in the current formula.
  • A segment of school funding for lower-income districts is down by $4.3 million (8 percent). Baltimore City, Dorchester County, and Prince George’s County lost funding.
• The governor proposed increased funding for specialized public school programs, supporting three additional technology-focused P-TECH high schools and one new LYNX high school. Lawmakers in the House have proposed to cut most of this funding.
• In a closely divided vote, the Appropriations Committee also cut $3 million Hogan proposed to use for private school scholarships for students in low-performing schools, arguing that the state’s focus should be on its public schools. An analysis of the program showed that most of the scholarships from the program went to students who were already attending private schools.
• The governor proposed cutting funding for three programs for students in low-income areas. House lawmakers have proposed at least partially restoring these funds:
  • Public Schools Opportunity Enhancement: Subcommittee restored $5 million in 2018 and restored the full $7.5 million mandate in future years.
  • Robotics grant: Committee fully restored $250,000 funding and mandate for future years.
• The governor’s budget cut back on a funding pool used to help attract and retain quality teachers and slashed a new pilot program that offers mentoring opportunities for first-year teachers. Legislative actions aim to restore this funding.
  • Teacher Induction, Retention, Advancement: Subcommittee restored $1.1 million in 2018 and restored the full $5 million mandate in future years

Higher Education

In the governor’s proposed budget, overall state aid to colleges and universities, including community colleges, went up about 2 percent, on average. The governor did propose reducing funding to private institutions and the Appropriations Committee opted to restore $2 million of the $6.6 million proposed cut.

On a positive note, the budget would restore funding to the state’s historically black colleges and universities that was cut from the current year’s budget and create a new matching program to help families save for college. However, Maryland’s HBCU’s remain in need of additional investment. Beyond the budget process, the state may be forced by the courts to increase funding to its historically black colleges and universities in the future, depending on the final outcome of a lawsuit.

Provider Rates

Governor Hogan’s budget included 2 percent increases in the rate most service providers are paid for things like caring for people with disabilities, foster care, and behavioral health services. These increases are important to ensure there are enough providers available in the community and that they are able to provide high-quality care. To save money, the Department of Legislative Services recommending capping provider rate increases at 1 percent, but House subcommittees rejected those proposals in favor of the 2 percent increase.

In a change from the governor’s budget, providers who work with people with developmental disabilities would receive a 3.5 percent increase under the subcommittee proposals – something that had been promised during last year’s budget negotiations but abandoned by the governor. These caregivers receive very low wages and the restored 3.5 percent increase is part of a plan to gradually raise the wage to a more sustainable level.

Health Care

In the area of health care, the Appropriations Committee rejected most of Gov. Hogan’s proposed funding cuts and shifts within the various agencies that provide health care. The committee restored state funding for the Prince George’s County Regional Medical Center, in line with an agreement adopted last year, and rejected a proposal from state analysts to have local health departments absorb the costs of employee health insurance.

The committee also signed off on budget language requiring the governor to work with the legislature in responding to any federal efforts to convert programs like Medicaid and SNAP to block grants. Block grants and similar approaches like per-capita caps shift greater funding responsibility to states and could make it harder to fund services. Watch for future analysis by MDCEP on this very topic.

Social Services

Most of the funding cuts in social services programs are due to expected declines in caseloads for food assistance (SNAP), temporary disability assistance (TDAP), and cash assistance (TCA).

State analysts recommended a $4 million cut to the state program assisting people with disabilities to reflect declining caseloads. The House subcommittee adopted language instructing the Department of Human Resources to raise the benefit amount, which has not been increased for more than 15 years, but also adopted the recommended $4 million cut. The Senate should adjust this action and reserve the $4 million surplus for increasing the benefit amount, rather than adopting language supporting the benefit increase and not funding it.

During the budget hearings, advocates highlighted that the Maryland Commission on Civil Rights is in danger of being understaffed and there is no allocation for hiring additional staff. The commission is tasked with investigating discrimination in employment, housing, public accommodations, and state contracts and otherwise improving civil rights in Maryland. Complaints are increasing due to better outreach efforts encouraging the victims of discrimination to report the incidents. However, staffing for the commission has decreased by 42 percent since 2002.

Business & Economic Development

Economic development is one area that the governor proposed significant spending increases. While this is an important role for state government to play, at a time when the state’s cash flow is tight, it doesn’t make sense to increase investment in programs that have not proven very effective, like the Enterprise Zones. Unfortunately, the House committee largely agreed with the governor’s proposals:

• The committee provided level funding for the Small, Minority, and Women-Owned Business Investment Account at $13.7 million; the governor had proposed a slight increase
• $30 million to the Maryland Economic Assistance Authority Fund (a 50% increase from 2017)
• $22.4 million for Enterprise Zone Tax Credit (a 14% increase from 2017)
• $5 million in the Film Production Tax Credit (decrease of 56% from 2017). The entire amount will go to House of Cards’ next season.
• $1 million to Maryland Marketing Partnership to establish new state branding, based on a recommendation from a state commission last year
• $20 million for the Marriott headquarters and $5 million for Northrop Grumman that were approved but not included in the current year’s budget
• $2 million new spending for the Cybersecurity Investment Tax Credit contingent on passage of a bill broadening eligibility due to previous low demand for the credit
• META fund (the state’s largest business assistance program) could see a funding increase contingent on legislation to broaden eligibility and make it more flexible