Maryland state budget
|Maryland state budget|
|Date signed:||May 22, 2012,|
|GF expenses:||$15.3 billion|
|All funds expenses:||$35.5 billion|
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- 1 Federal Aid to State Budget
- 2 State Budget for FY2013
- 3 State Budget for FY 2012
- 4 Budget transparency
- 5 Budget background
- 6 Accounting principles
- 7 Credit rating
- 8 Public Employees
- 9 Stimulus
- 10 See also
- 11 External links
- 12 Additional reading
- 13 References
As of August 2012, Maryland had a total state debt of approximately $81,728,779,000, when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 budget gap. The total state debt is similar to the prior year's total of $81,502,963,000.
Maryland's total state debt per capita is $14,022.77 as of October 2012.
Federal Aid to State Budget
The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):
|Maryland||26.08% (#37)||29.57% (#38)||33.77% (#34)||34.35% (#32)|
- Figures were calculated by dividing each state’s intergovernmental revenue into its general revenue.
State Budget for FY2013
Special Session for Gambling
Gov. Martin O'Malley called a special session to begin on Aug. 9, 2012, to consider expanding gambling in the state in an effort to generate more revenue, which could be up to an additional $100 million in the first year.
Special sessions cost taxpayers approximately $20,000 a day.
Special Session for State Budget
Gov. O'Malley called a special session to begin on May 14, 2012, to complete work on the state budget rather than just accept the doomsday budget that resulted from the regular legislative session.
On May 16, 2012, the legislature agreed to raise the income tax rate on individuals making more than $100,000 and families making more than $150,000, which represent the top 14% of earners in the state. The new top state-local tax bracket will tie for fourth-highest in the nation, at 8.95 percent.
The additional $250 million in revenue generated by the tax increase means that the state can avoid making cuts that were to take effect on July 1, 2012.
The budget also raises taxes on small cigars and smokeless tobacco products to bring their costs more into line with those of cigarettes. A companion bill also transferred teacher pension costs to counties.
The budget can be found here.
On April 9, 2012, the regular legislative session ended without approving an income tax measure, meaning that a so-called "doomsday" budget will take effect when the fiscal year begins on July 1, 2012. The doomsday budget includes no tax increases and huge cuts to public and higher education.
It is the first time since 1992 that the legislature has not completed its work on the budget during the 90 days.
Cuts in the 'doomsday budget' include:
- eliminating the Geographic Cost of Education Index, which helps parts of the state where schooling costs more, saving $129 million;
- public higher education would be cut by 10 percent to save $38.5 million;
- community colleges would lose approximately $20 million in state funding.
Legislative Proposed Budget
As of April 6, 2012, the conference committee was at an impasse on the issue of raising income taxes, which must first be determined to establish how much money the state will have to spend in the budget. The legislative session ends on April 9, 2012.
On March 23, 2012, the House of Delegates approved its version of the state budget. The House budget would target the state’s top fifth of tax filers, or most of those earning above $100,000, unlike the Senate's version, which collect most of its new revenue from an across-the-board income tax hike.
The Senate approved a FY2013 budget package that consists of four separate pieces of legislation, including a bill to increase income taxes and another to close loopholes in local school funding requirements. The bills together would balance the FY2013 budget and cut an ongoing $1.1 billion deficit in half.
The Senate approved an income tax increase to 5.75 percent on those making over $500,000 on March 14, 2012, which would generate more than $440 million next year. The Senate did not approve amendments offered by Republican lawmakers to avoid an income tax increase by making larger budget cuts.
Both the Senate and House plans followed the governor's proposed budget plan to increase taxes instead of cutting spending, and funding education at record levels. Both plans maintain general fund spending at FY2012 levels, but permit borrowing and overall spending to increase $1 billion, or 3 percent.
Governor's Proposed Budget
The governor presented his proposed budget on Jan. 18, 2012, and it can be found here.
The budget spends a record $5 billion on public K-12 education direct aid, $108.5 million more than the state spent in FY 2012, and $373 million for new construction and renovation for our public schools, bringing the six-year total to $2 billion.
The plan includes different ways to raise an additional $300 million in revenue by phasing in roughly 20 cents more per gallon in state taxes to fund road and transit work. Additional increases include:
- and raising income taxes on Individuals who earn more than $100,000 and couples that make more than $150,000, and
- sales tax on some Internet purchases and downloads,,
- higher fees on most Maryland residents’ water and sewer bills to fund environmental cleanup efforts for the Chesapeake Bay, known as a "flush tax,"
- Increase fee on electric bills to pay for an offshore wind farm.
The governor also has recommended a significant shift of teacher pension costs from the state, which currently pays the entire bill, to the counties, resulting in nearly $240 million in new expenses to the counties. The governor has included money to help them make the transition, including about $111 million in new revenue from reducing tax exemptions for people who make more than $100,000. County officials voiced their disapproval of the move at the Senate Budget and Taxation hearing on Feb. 29, 2012.
The state faces a $1 billion shortfall in FY2013 due to slower than expected revenue growth and Gov. Martin O'Malley has said that new taxes may be necessary to close the gap. The governor said he support for a 5-cent increase in the state's 23.5-cent gasoline tax every year for the next three years. Then, in Jan. 2012, on the first day of the 2012 session of the Genera Assembly, he suggested increasing the tax from 6 percent to 7 percent as an alternative to a 15-cent increase in the gas tax. Democratic leaders have said they are likely to raise taxes this session to help pay for roads, schools and other infrastructure projects. 
The chief fiscal analyst for the Maryland General Assembly, Warren Deschenaux, warned lawmakers that they need to prepare for the “big train that is coming” from federal budget cuts by reducing the state’s running budget deficit in this legislative session. He explained that the state has a structural deficit of about $1.1 billion and the governor's proposed budget lowers that deficit to $400 million.
State Budget for FY 2012
- See past state budgets
In February 2012, a mortgage fraud settlement between banks and states was announced. Maryland Attorney General Doug Gansler aid that he planned to make roughly 10 percent of his state's $62.5 million payment available for the governor and lawmakers to use as they choose.
The state will face a roughly $1.1 billion gap between expected revenues and planned spending. The state faces cumulative annual budget gaps of more than $7.2 billion over the next four years. The state has a triple-A bond rating, but Moody's Investors Service placed Maryland on its credit watch list for a potential credit downgrade, depending on how Congress resolves an ongoing battle over raising the federal debt ceiling and cutting the nation's long-term deficit. Nearly half of the state's Medicaid budget is paid for with federal money.
Maryland will receive $9 billion in federal assistance in FY2012.
The Department of Legislative Services predicted that the state's expenditures would total $15.6 billion in FY2012, when the state revenue will reach $14 billion if the nation continues on a moderate economic rebound. Board of Revenue Estimates, however, announced two months prior, on Sept. 17, 2010, that the FY2012 general fund level would be $13.6 billion approximately $50 million more than members had assumed in March 2010. To close the gap, the Department of Legislative Services indicated that Gov. Martin O'Malley would have to make big cuts in government services, the state payroll or other areas.
The governor is said to be considering across-the-board cuts in local education funding, a reduction in payments to mental health providers who serve the poor and a shift of hundreds of millions of dollars in teacher pension costs to the counties. He has said that he will not raise taxes. The governor's budget advisers recommended shifting 40% of the state's teacher retirement costs to county governments, a move that could save the state $342 million a year but exacerbate local fiscal woes, and although the governor said he likely would not follow that recommendation he said it was being considered.
The budget also raises fees. Birth certificate fees doubled from $12, the fee for a vanity license plate doubled from $25, a surcharge on filing land records doubled from $20 and the cost of titling a new car doubled from $50 to $100. 
The state's summary of operating budget appopriations can be found here.
The state's FY2012 Tax Expenditure Report can be found here.
Democrats control both chambers of the General Assembly and they agreed to study the merger of the state’s two top public universities as a cost-saving move, and left it up to leaders of the House of Delegates to decide whether it would increase sales tax on alcohol by 3%, the money from which would mostly be used to restore modest K-12 funding in Prince George’s County and Baltimore.
In the General Assembly's FY2012 state budget, employee contribution to the pension system increases from 5% to 7% of their salaries. Two-thirds of that new $185 million in revenue, however, is expected to go to the general fund, not the pension fund.
Governor's Proposed Budget
Facing a $1.35 billion budget gap, Gov. Martin O'Malley proposed a budget for fiscal year 2012 that includes drastic cuts to local governments and major spending cuts. O'Malley's proposed budget includes $949 million in proposed spending cuts, $225 million in transfers from other state funds and using $143 million of previously unbudgeted funds. His proposal draws $264 million from the Medicaid budget, $104 million from reform of the state employee retirement system, $55 million from higher education and $52 million from local governments.
O'Malley's budget includes $7 billion to bring health care coverage to more than 900,000 low-income, disabled, ill children and adults. It also provides $18 million for prescription drug assistance to Maryland seniors. Other health care provisions include $3 million for Maryland Access Point, which improves access to long term support and services for seniors and people with disabilities.
O'Malley's budget also provides aide to local governments and municipalities. His budget plan includes $45.4 million for police assistance and $20.3 million in local law enforcement grants that target domestic violence, substance abuse, and gun trafficking. The budget also increases spending for evidence based services for juvenile offenders by 18 percent to $5.6 million.
Several fee increases under the O'Malley budget include doubling the title of a car purchase from $50 to $100, doubling the cost of a personalized license plate from $25 to $50 and doubling the charge for tax filing from $20 to $40.
Budget Highlights Include:
- $446 million cut from state agencies
- $94 million cut from education aid funds
- $132 million cut from state retirement and health benefits
- 3.4 percent cut in funding for the Department of Labor, Licensing and Regulation's Division of Financial Regulation
- $15 million for the Maryland Economic Development Assistance Fund to help stimulate business growth and economic development, which is a 25 percent increase
- $80.1 million, or a 25.3 percent increase, to support unemployment insurance
- $12.4 million for stem cell research
- $8 million for biotechnology tax credits, and $3.8 million for the Maryland Biotechnology Center;
- $10 million in sustainable communities tax credits to promote urban redevelopment and create job
- $250 million for public school construction
- $8.2 million for major tourist and cultural attractions
- $5.8 million for the One Maryland Broadband Network, which connects three existing broadband networks across Maryland
Responding to the O'Malley budget proposals that include millions in cuts and proposed higher employee pension costs, thousands of teachers and other public employees descended on the state capital. The teachers are protesting cuts in educational spending, which they say violates a state law mandating annual increases to improve the state’s classrooms. Other union members are protesting O'Malley's proposal to have public employees increase their contributions by 25 percent, to 7 percent of their pay, to earn the same retirement pay they had been expecting. The employees could opt to continue contributing about 5.6 percent of their pay to the fund but would risk decreased benefits. Under O'Malley's pension reforms new state employees could not retire with full benefits until the age of 60, as opposed to 55 for current employees.
- See also: Evaluation of Maryland state website
Maryland has partial transparency, thanks to the passage of the Maryland Funding Accountability and Transparency Act. The state has made a searchable database available.
This database for Maryland Funding Accountability and Transparency is sponsored by Maryland's Department of Budget and Management. It contains information on payments to vendors who have received over $25,000 from the state during the fiscal year. This Website provides financial information for fiscal year 2008 - 2010.
Note: the database in some cases reflects payments made to middlemen or agents, for example, the Department of Agriculture "Maryland Ag Land Preservation Foundation" payments are not available in detail. MALPF is a standalone foundation, legally, but organizationally is part of the Dept. of Ag. So searching the database for "MALPF" or its longer name is not helpful.
You have to type in "Agriculture" and then search; the list that results is not very detailed. Take the top vendor:
2008 LAW OFFICE OF HENRY I LOUIS 21201 $20,504,892.54
2008 SAMUEL L HECK ATTORNEY 21620 $8,850,627.04
These attorneys are facilitating multiple land conservation purchases. You can't find out how much was paid to Henry Louis for services. You can't find the individual amounts paid for easements to landowners.
To get useful information requires filing a Maryland Public Information Act request. The agency may or may not cooperate.
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
|State Database||Searchability||Grants||Contracts||Line Item Expenditures||Dept/Agency Budgets||Public Employee Salary|
|MD's Funding Accountability and Transparency|
Limitations and Suggestions
This database provides useful information, but is limited in scope, and does not provide line-item expenditures (in part due to its exemption of vendors that received less than $25,000 in any given year). The expenditures it does list are limited to those made to vendors; it does not provide information on grants, or public employee salaries. Such information would prove useful for government officials, legislators, and citizens alike as they work in concert to improve the efficiency and productivity of the state.
Multi-Measure Budget Transparency Profile
The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Maryland, which measures state transparency as of September 2011 using indicators from a range of organizations, including Sunshine Review. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state. In addition to the individual state profile, IGPA offers a 50-state comparison. It also offers profiles for other states.
Maryland's fiscal year begins July 1 and ends June 30 of the following year. Every year around August or September the Department of Legislative Services develops the fiscal forecast for the year in order to help create a balanced budget for the next fiscal year. In August the state's individual agencies submit budget requests and between October and November the Governor holds hearings with each agency. By the end of December the Governor completes a budget recommendation which is presented to the Legislature the 7th or 10th day of session in January. Once both the House and the Senate pass the bill, after making any necessary amendments. The Legislature gets the final say on the budget. The Governor lacks any veto authority with respect to the budget as passed.
Created in 1945, the Board of Revenue Estimates is concerned with revenues that will fund State government (Chapter 991, Acts of 1945). The Board reviews the findings and recommendations of the Bureau of Revenue Estimates. The Board then sends to the Governor, for submission to the General Assembly, an itemized statement of estimated revenues for the current and next fiscal years. The Board has three ex officio members: the Comptroller of Maryland, the State Treasurer, and the Secretary of Budget and Management. The Director of the Bureau of Revenue Estimates, David F. Roose, serves as Executive Secretary (Code State Finance and Procurement Article, secs. 6-101, 6-102, 6-106).
The following table provides a history of Maryland's expenditures and gross domestic product (GDP).
|Fiscal Year||Expenditures (billions)||GDP (billions)|
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
Maryland's Office of Legislative Audits (OLA) publishes its audit reports online. OLA is part of the Maryland General Assembly’s Department of Legislative Services and operates under the authority of the State Government Article, Sections 2-1217 through 2-1227 of the Annotated Code of Maryland; directed by the Legislative Auditor Bruce A. Myers.
OLA reports to the General Assembly’s Joint Audit Committee and is responsible for:
- Performing fiscal compliance audits of State agencies to evaluate fiscal operations and determine compliance with laws and regulations
- Conducting performance audits to evaluate whether a State agency or program is operating in an economic, efficient and effective manner
- Conducting performance audits of the financial management practices of local school systems
- Operating a fraud hotline for reporting fraud, waste, and abuse of State resources
- Monitoring the financial reporting practices and financial condition of local governments in Maryland
- Conducting special reviews and investigations requested by the Joint Audit Committee
The Institute for Truth in Accounting (IFTA) rates Maryland “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Maryland’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care. Maryland's CAFRs are published online by the Maryland State Comptroller. Maryland's FY 2007 CAFR received the Award for Excellence and "Spirit of Full Disclosure."
The State of Maryland was given the following ratings by S&P as of 2012 and by Fitch and Moody's as of 2010.
According to 2011 Census data, the state of Maryland and local governments in the state employed a total of 346,196 people. Of those employees, 273,349 were full-time employees receiving a net pay of $1,368,181,391 per month and 72,847 were part-time employees paid $128,411,988 per month. More than 57% of those employees, or 199,850 employees, were in education or higher education.
Maryland received $5.8 billion in federal funding between February 2009 and June 2013. According to Federal Fund Information for States, Maryland received approximately $470 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010. When the funds were first announced, Gov. Martin O'Malley said $178 million of those funds would go toward education.
- State Budget Solutions, Maryland
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Department of Budget and Management, Funding Accountability and Transparency Database
- Maryland Public Policy Institute
- Calvert Institute for Policy Research
- Free State Foundation
- Maryland Department of Budget and Management
- Maryland Government spending
- Maryland House Bill 358 (2008), Maryland Funding Accountability and Transparency Act
- Gov. Martin O'Malley,"2010 State of the State," February 2, 2010
- Governor Martin O'Malley,"2009 State of the State," January 29,2009
- The Washington Post "Maryland legislators reach deal on budget over roads, teacher pensions" April 9, 2010
- The Daily Record "As stimulus ends, state to face budget gaps" August 2, 2010
- State Budget Solutions "State Budget Solutions' third annual State Debt Report shows total state debt over $4 trillion" Aug. 28, 2012
- State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
- State Budget Solutions "State debt more than $37,000 per private worker, $13,000 per capita" Oct. 2, 2012
- Tax Foundation, "Monday Map: Federal Aid to State Budgets," accessed August 16, 2013
- US Census Federal Aid to State and Local Governments
- Tax Foundation' "Monday Map: Federal Aid to State Budgets. Accessed October 15, 2013
- CBS MoneyWatch "Md. gov calls for special session to begin Aug. 9" July 27, 2012
- The Washington Post "Md. special session to start May 14; O’Malley wants lawmakers back to rectify budget" May 4, 2012
- The Washington Post "Md. passes income tax hike on six-figure earners" May 16, 2012
- The Baltimore Sun "General Assembly raises income tax on top 14 percent" May 16, 2012
- The Baltimore Sun "Assembly fails to pass tax bill, adopts 'Doomsday' budget" April 10, 2012
- ABC2News.com "'Doomsday budget' passed in Maryland legislative session" April 10, 2012
- DelmarvaNow.com "O'Malley mum on special session to change Md. budget" April 10, 2012
- The Baltimore Sun "Senate, House stuck on state budget' April, 2012
- The Maryland General Assembly Home Page Visited April 6, 2012
- The Washington Post "Maryland House passes budget, setting up a debate with Senate over size of tax hike" March 23, 2012
- The Washington Post "Maryland Senate approves higher income tax for people who make more than $500K" March 14, 2012
- Press Release "Governor O’Malley Presents FY 2013 Budget Focused on a Balanced Approach of Reductions and Investments to Create Jobs" Jan. 18, 2012
- The Washington Post "O’Malley tries to rally support for gas tax increase" March 14, 2012
- The Washington Post "Governor O’Malley’s Maryland state budget proposal" Feb. 4, 2012
- The Washington Post "Governor O’Malley’s budget raises taxes on Maryland’s high-earners" Jan. 17, 2012
- The Washington Post "Top analyst warns Maryland lawmakers to prepare for “big train” of federal cuts" Jan. 23, 2012
- The Washington Post "Budget measure frustrates residents and county officials in Maryland" Feb. 29, 2012
- the Washington Examiner "Maryland faces $1b budget shortfall as revenue slows" Oct. 20, 2011
- The Washington Post "Gov. O’Malley: Tax increases may be needed in Md." Aug. 2011
- phttp://washingtonexaminer.com/local/2011/10/md-faces-1b-budget-shortfall-revenue-slows#ixzz1c1XjyT1P the Washington Examiner "Maryland faces $1b budget shortfall as revenue slows" Oct. 20, 2011]
- The Washington Times "O’Malley springs sales-tax surprise on assembly" Jan. 12, 2012
- CBS Money Watch "States diverting foreclosure settlement funds" March 14, 2012
- The Washington Examiner "Md. faces another $1.1b budget gap" July 26, 2011
- The Washington Post "Md.'s bleak budget outlook: Gap is larger than projected" Nov. 10, 2010
- The Washington Times "O’Malley: Biggest variable in state budget is Congress" Aug. 24, 2011
- The Baltimore Sun "State revenue projections increase" Sept. 16, 2010
- The Washington Post "Budget process becomes 'more painful' in Md." Dec. 27, 2010
- The Washington Post "O'Malley budget advisers: Counties should pay 40 percent of teacher pension costs" Dec. 20, 2010
- CBSNews.com "States eye fee increases as alternative to taxes" July 23, 2011
- The Washington Post "Md. Senate, House reach final deal on state budget" April 5, 2011
- The Herald Mail "Part of Maryland pension hike to go toward balancing state budget" April 14, 2011
- Baltimore Business Journal, O'Malley Outlines Plan to Close $1.35bn Deficit, January 21, 2011
- Baltimore Business Journal, Highlights of O'Malley's Budget Proposal, January 21, 2011
- Baltimore Business Journal, Highlights of O'Malley's Budget Proposal, January 21, 2011
- Washington Post, Maryland Budget Fights Will Focus on Benefits for State Workers, Tax Increases, March 19, 2011
- Baltimore Business Journal, Highlights of O'Malley's Budget Proposal, January 21, 2011
- Washington Post, O'Malley Proposes Pension Reform, January 22, 2011
- Maryland House Bill 358 (2008)
- Maryland Funding Accountability and Transparency database
- Some budget information is made available here, however.
- Grants and Payments
- DGS Contracts
- University of Illinois Institute of Government and Public Affairs, "Kansas: Budget Transparency Profile," accessed August 16, 2013
- University of Illinois Institute of Government and Public Affairs, "Alabama: Budget Transparency Profile," accessed August 16, 2013
- University of Illinois Institute of Government and Public Affairs, "State Transparency Profiles," accessed August 16, 2013
- Maryland General Assembly Web site, retrieved October 24, 2009
- State of Maryland,"Overview of Maryland budget processes," October 24,2002
- Maryland Comptroller Web site, retrieved October 24, 2009
- Gov. O'Malley Press release, "Statement from Governor O'Malley on Revised Budget Projections," October 17, 2009
- US Government Spending,"Maryland State and Local spending," retrieved March 17,2009
- Maryland Office of Legislative Audits, "Audit Reports," accessed August 20, 2013
- Maryland Office of Legislative Audits Web site, retrieved October 24, 2009
- Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
- Comptroller of Maryland, "Comprehensive Annual Financial Report (CAFR) Archive," accessed August 20, 2013
- Maryland State Comptroller Web site, retrieved October 24, 2009
- "State Budget Solutions", State GO Debt Ratings," accessed August 19, 2013
- The Pew Charitable Trust, “Infographic: S&P State Credit Ratings 2001–2012," accessed August 19, 2013
- Maryland Public Employment U.S. Census Data
- Recovery, "Stimulus Spending by State"
- Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
- DelmarvaNow.com "Maryland to receive $450 million from jobs bill" Aug. 12, 2010