1. Maryland: Fiscal Challenges
Presented at Advocating for Maryland Values
June 8, 2017

2. The 2017 Session
Significant revenue write-downs after the 2016 legislative session resulted in the need to act to balance the fiscal 2017 and 2018 budgets
The fiscal 2017 budget was balanced primarily by
$82 million in November Board of Public Works savings
$170 million transfer from the Rainy Day Fund
Not spending $88 million in funding restricted by the legislature for various purposes

3. 2017 Session (Continued)
The fiscal 2018 budget was balanced through a combination of reductions made by the Budget Reconciliation and Financing Act (BRFA), for example to supplemental pension contributions, to mandatory contributions to the Rainy Day Fund, and deferring certain mandates enacted in the 2016 session
Budget balancing was made easier by favorable caseload trends (e.g., public safety and Temporary Cash Assistance), little increase in State employee costs (no raises or cost­-of-living adjustments, available health insurance fund balance, and lower retirement contributions), and low inflation (limiting formula growth)
While the fiscal 2018 budget was balanced, little was proposed and nothing was adopted that significantly helped the projected structural budget shortfall in the out‑years

4. Projected General Fund Structural Deficit Exceeds $1
Projected General Fund Structural Deficit Exceeds $1.5 billion by Fiscal 2022

5. Most of the General Fund Budget Is Mandated or for Entitlements
($ in Millions)

6. Mandates and Entitlements
In fiscal 2017, almost $6.0 billion (72%) of total general fund mandated funding was in K-12 education, including the foundation program, compensatory education, and teacher retirement payments
Other significant mandates include State employee retirement contributions, support of the Judiciary, and Debt Service
The largest area of general fund entitlement funding is Medicaid, $3.5 billion (92%) of total general fund entitlement spending

7. Medicaid Coverage Has More Than Doubled in the Past Decade
ACA: Affordable Care Act PAC: Primary Adult Care
MCHP: Maryland Children’s Health Program YTD: year-do-date

8. Medicaid Spending Will Consume More of the General Fund

9. Uncertainty at the Federal Level
Maryland’s economic health is disproportionately tied to federal actions
Federal Government Employment
As a Percent of Total Employment

10. Federal Uncertainty Continued
Federal Government Wage Income
As a Percent of Total Wage Income
Calendar Years

11. Fiscal 2018 Budget Includes $13 Billion in Federal Funds
SNAP: Supplemental Nutrition Assistance Program

12. American Health Care Act as Passed by the House Has Significant Budget Consequences
ACA: Affordable Care Act
GF: general funds

13. Moving Forward Maryland is facing a sizable budget gap in fiscal 2019
Solutions are expected to be broadly similar to those used in fiscal 2018 – for example, holding down employee compensation and use of the BRFA to reduce mandates and authorize the transfer of dedicated funds to other purposes
Uncertainty at the federal level could impact overall economic picture and potentially have significant budgetary impacts if not in fiscal 2019, then beyond