Hogan Announces Budget, Touts Education as Priority

By Anjali Shastry

ANNAPOLIS—Twenty-four hours after being sworn in, Maryland Gov. Larry Hogan announced his fiscal year 2016 budget, cutting all agency spending by 2 percent, but increasing funding for K-12 schools and higher education.

Hogan announced a 2 percent cut across all state agencies to break what he called the “ongoing cycle of excessive spending and borrowing” caused by tax hikes.

Hogan's budget also includes funding for the proposed Purple Line and Baltimore Red Line rail projects, Secretary of Budget and Management David Brinkley said. However, Brinkley said, "both projects are pending review and re-evaluation."

Controversial taxes, such as the “rain tax,” were not addressed. While Hogan said he planned to cut taxes, it would be at a later date.

Hogan said Thursday his budget team created a “structurally balanced budget without gimmicks or sleight of hand,” something he said hadn’t been done for 10 years. He described his fiscal outline’s motto as, “Balance today, balance tomorrow.”

Hogan criticized the previous administration for “being on track to spend $700 million that we did not have” and putting the state “on a path to financial peril,” he said.

“Our budget puts Maryland on sound financial footing without raising taxes or fees and without eliminating agencies, departments or services, without laying off a single state employee and without any furloughs whatsoever,” Hogan said.

The operating budget, which Hogan said represents 19 percent of the state’s total annual spending, expends $16.4 billion on revenues of $16.4 billion, he said.

Hogan stressed how balanced the budget was, “excluding appropriation to the reserve fund, PAYGO capital and debt service.”

Hogan announced that education was one of the administration’s top priorities.

“I’m introducing record spending in K-12 education and growth in higher education spending as well,” Hogan said.

The total budget for public schools is at $6.1 billion, including an increase of about $45.3 million after contingent reductions, Brinkley said.

State Senator Thomas Middleton, D-Charles, said he had only seen the governor’s overview presentation, and needed to see the actual budget when it is released Friday.

“A lot of it, the devil’s in the details,” he said.

Many people were concerned that the Geographic Cost of Education Index, which bases funding for public schools based on the cost of living in a jurisdiction, would be slashed completely, Middleton said. The scaled spending was cut in half, but it could have been worse, Middleton said.

Middleton said he was encouraged that Hogan kept the budget for school construction roughly the same as last year.

K-12 schools are receiving $290 million for education projects, including $280 million for the Public School Construction Program.

“There’s a lot more detail that we need before we can analyze what really happened,” Middleton said.

The budget provides for a 1.3 percent increase for the University System of Maryland, which will roughly translate to $15 million, Marc L. Nicole, the executive director of the Office of Budget Analysis, said. The total state funding for the University System of Maryland will be $1.2 billion, Brinkley said.

Brinkley also addressed potential tuition hikes to the University System of Maryland, saying they would be up to the Board of Regents, not the executive branch of state government.

“There’s no one that wants to know the exact number for the USM more than me, but there’s so much more to be said than what was presented today,” said Patrick J. Hogan, the associate vice chancellor for government relations for the University System of Maryland.

“Overall, the budget does grow a little bit, so there are ups and downs. That was one of the priority areas of spending for Gov. Hogan,” Nicole said.

The general fund spending growth in the budget is about 0.5 percent.

Health care and other businesses are also receiving aid from the state government.

The FY 2016 capital budget has allocated $48 million for improvements to Maryland’s health infrastructure, including $30 million that will go toward the Prince George’s County Hospital, Brinkley said.

A statement released by Hogan’s office Thursday gave information about how the new budget would help life science companies by including $12 million in biotechnology tax credits, putting $9.4 million into stem cell technology and spending $2.5 million in investments and tax credits for cyber security research.

State Senator Stephen Waugh, R-Calvert and St. Mary’s, said he thinks this General Assembly has the opportunity to do some good for the state, and the budget is a big part of that.

“I think the governor’s rhetoric today has been very consistent,” Waugh said. “He’s going to get spending under control so we can get taxes under control so we can bring businesses back to the state. I’m pretty happy about that.”

Delegate Ben Barnes, D-Anne Arundel and Prince George’s County, cited his concerns with the budget, saying, “We need some rationale here. We need some information. We want him to roll up his sleeves and come out and give us details. He’s the governor of the state, so now’s the time.”

Budgets for Beginners:

The governor’s office releases a budget at the beginning of every calendar year for the fiscal year (FY), which begins July 1 and ends June 30 of the following year. The budget is named for the year in which it ends, so for example, FY 2015 started on July 1, 2014, and will end June 30, 2015.

Hogan has announced his FY 2016 budget, which will take effect on July 1 of this year. Previous Gov. Martin O’Malley’s office had proposed a budget for Hogan, who had the choice of building on it or creating something new altogether.

Brinkley said the Hogan administration did not create the budget from scratch. They only had about 19 percent of the operating budget to play with, he said, because of all the state’s long-term financial commitments.

As governor, Hogan has power to alter the FY 2015 budget through his role as a member of the Board of Public Works, which also includes Treasurer Nancy K. Kopp and Comptroller Peter Franchot. O’Malley recently altered the budget to take out $400 million to slash the shortfall Hogan’s office would inherit, and Hogan can continue to make limited changes until his budget goes into effect.

--Capital News Service correspondents Nate Rabner, Grace Toohey and Deidre McPhillips contributed to this report.

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