ANNAPOLIS, Md. (AP) - Officials on a Maryland fiscal panel called for caution in state budgeting Wednesday as state lawmakers head into the next session with more than $1 billion in unspent revenues amid looming proposals to significantly increase education spending.
Comptroller Peter Franchot, a member of the Board of Revenue Estimates, said at the board’s meeting that there is no guarantee the nation’s long-running economic expansion will continue. He noted a motto from the “Game of Thrones” television series: “winter is coming,” and recommended lawmakers put the money in the state’s Rainy Day Fund to prepare for a potential downturn.
“I don’t want to jinx it. Nobody’s in favor of recessions, but winter is coming, so let’s prepare, because if we have a billion in reserve that we normally would not have it allows us to protect the taxpayers from something that they’re not responsible for,” said Franchot, a Democrat.
Maryland’s budget surplus results from about $500 million in surplus last year, as well as money flowing into Maryland’s coffers due to changes in federal tax law and the Wayfair Supreme Court ruling, which gave states the go-ahead to require more companies to collect sales tax on online purchases. In September, the board revised the revenue estimates upward by more than $700 million. This time, there was a relatively modest downward revision by $18.4 million for fiscal year 2019. That’s about 0.1 percent of the state’s $18 billion general fund revenues.
David Brinkley, Gov. Larry Hogan’s budget secretary and a board member, said the positive changes helped the state’s short-term financial position. He said the state’s long-term budget trajectory shows spending will increase by about 5 percent annually over the next five years, compared to 3.5 percent revenue growth. He said that’s a difference of about $300 million a year, up to about $1.5 billion by fiscal year 2024.
Brinkley, a Republican, also noted that the cost of a state commission’s recommendations to increase education spending remains unknown. He said it also is unclear which of those recommendations will be enacted by lawmakers next year, and he noted a renewed threat of a federal government shutdown and its impact on a state that is home to many federal workers.
“The fact that Maryland’s fiscal health remains relatively volatile demonstrates precisely why it’s essential that we maintain fiscal discipline,” Brinkley said.
In calling for caution, Franchot noted the difficulties state officials faced the last time they changed the state’s education funding formulas in 2002 under The Bridge to Excellence in Public Schools Act of 2002, which is commonly known as Thornton - after the name of the commission chairman - only to be hit by the Great Recession several years later.
“We’ve experienced the problems of passing Thornton without having the funding for it,” Franchot said. “We’ve experienced the big recession and the cuts that we had to make, so let’s keep those in the back of our heads as we deal with this unexpected windfall of over a billion in cash that has nothing to do with economic growth.”
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