Maryland’s Budget
The Smell of Gunsmoke
Neil Bergsman
Maryland Budget and Tax Policy
Institute
April 18, 2011
Economic Context
Good
Corporation profits at record levels
US Corporate Profits
1.9
1.7
$ Trillions
1.5
1.3
1.1
0.9
0.7
'06Q1 '06Q2 '06Q3 '06Q4 07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4
Bad
Economic growth has resumed, but not enough to fuel
a broad, sustainable recovery
US Gross Domestic Product (GDP)
6.0
4.0
2.0
0.0
-2.0
-4.0
-6.0
-8.0
Ugly
Jobs are not coming back
Maryland jobs - change from pre-recession peak
150
'81
Md Employment - thousands
100
50
'90
'01
0
-50
-100
-150
'08
-200
0
6
12
18
24
Months after peak
30
36
42
Threats to the economy
•Federal spending cuts
•State and local
spending cuts
•Not just Maryland
•Middle East
•Japan
The Big Picture
BUDGET OUTCOMES
Good
• Budget is balanced through June 30, 2012
• General fund balance $50 million
• Rainy day fund $681 million
Bad
• The budget incorporates over $1 billion in cuts
from current-service levels
– Teacher and employee benefits
– School systems
– Healthcare providers
– Local governments
Ugly
• The budget leaves a billion-dollar long term
problem for upcoming years
On going base
revenues,
$13,841
Hospital
Assessment, Alcohol tax, $85
$254
1-time savings,
$170
Balances &
transfers, $824
FY 12 General Funds
$ millions
Getting more specific
A QUICK TOUR OF THE BUDGET
K-12 Education
• Legislature restored $58 million
of $94 million education cut
• Per-pupil funding frozen
• Part of alcohol tax dollars fund
school construction and offsets
formula-driven cuts for 4 lowincome school systems
Medicaid
• No changes to eligibility or covered services
• Most provider rates frozen or cut back 1%
– Including waiver services like adult day care
• Hospital and nursing home assessments
• Concerns about access to care
Health
• Local health
– Level funded
– 55% of pre-recession levels
• Addiction treatment
– Budget is $6 million below ‘09 actual expenses
• Developmental disability services
– $15 million for waiting list in alcohol tax
• Mental health
– $15 million in supplemental budget for community
services
Children’s programs
• Child care received supplemental budget
funding, but a waiting list remains in place
Safety Net
• Temporary cash assistance
– Caseload growth continues
– $127 m projected shortfall
– Federal funding remains uncertain
• $500,000 “Cash flow” cut to Rental Allowance
Program
• Temporary Disability Assistance (TDAP)funding
intact
– Grant amount is $185/month
Department on Aging
• Funding essentially flat.
• Waiting lists for most services
– 17,000 on waiting list for home and community
care waiver
Pension reform
selected provisions
Current Teachers &
Employees
New Teachers &
Employees
7% (was 5)
7%
1.8%
1.5%
5
10
Early retirement
Age 55 w. 15 years
Age 60 w. 15 years
Normal retirement
30 years or Age 62
Age 65 or “Rule of 90”
COLAs
Inflation up to 3%
Inflation up to 2.5% if plan
meets investment target or
1% if not.
Employee contribution
Benefit multiplier
Vesting
Funding
80% after 10 years
Retiree Rx Changes
selected provisions
Current
O’Malley
Approved
Co-Pays
(generic/preferred/
non-preferred)
5/15/25
$310 deductible
25% co-insurance
10/25/40
Out-of-pocket max
(single/couple)
700/700
4,550/9,100
1,500/2,000
20%
20%
25%
-0-
$22 m
$14 m
Retiree share of
premium
Budget savings (GF)
Alcohol Tax
• Separate legislation passed after
budget
• 3% special sales tax added to 6%
regular sales tax
– Beer, wine, and liquor
• $85 million
– 15 m for developmental disabilities
– 22 m for 4 local school systems
– 47 m for school construction
Meanwhile, in Washington
The biggest threats to
senior programs over the
next year could be at the
federal level
•Social security
•Medicare
•Medicaid
•Grant funds for local
services
Coming
Attractions
•Summer 2011 Executive
budget process starts back
up
•Fall 2011 Special session
for Congressional
districting
•January 2012 Regular
Session
Showdown Time?
www.marylandpolicy.org
Sources
•
•
•
•
•
ACLU of Maryland
Loraine Sheehan Alcohol Tax Coalition
Maryland Department of Legislative Services
US Bureau of Economic Analysis
US Bureau of Labor Statistics