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Maryland’s Budget The Smell of Gunsmoke Neil Bergsman Maryland Budget and Tax Policy Institute April 18, 2011
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Economic Context
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Good Corporation profits at record levels
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Bad Economic growth has resumed, but not enough to fuel a broad, sustainable recovery
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Ugly Jobs are not coming back
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Threats to the economy Federal spending cuts State and local spending cuts Not just Maryland Middle East Japan
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BUDGET OUTCOMES The Big Picture
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Good Budget is balanced through June 30, 2012 General fund balance $50 million Rainy day fund $681 million
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Bad The budget incorporates over $1 billion in cuts from current-service levels – Teacher and employee benefits – School systems – Healthcare providers – Local governments
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Ugly The budget leaves a billion-dollar long term problem for upcoming years
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A QUICK TOUR OF THE BUDGET Getting more specific
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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 low- income school systems
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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
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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
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Children’s programs Child care received supplemental budget funding, but a waiting list remains in place
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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
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Department on Aging Funding essentially flat. Waiting lists for most services – 17,000 on waiting list for home and community care waiver
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Pension reform selected provisions Current Teachers & Employees New Teachers & Employees Employee contribution7% (was 5)7% Benefit multiplier1.8%1.5% Vesting510 Early retirementAge 55 w. 15 yearsAge 60 w. 15 years Normal retirement30 years or Age 62Age 65 or “Rule of 90” COLAsInflation up to 3%Inflation up to 2.5% if plan meets investment target or 1% if not. Funding80% after 10 years
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Retiree Rx Changes selected provisions CurrentO’MalleyApproved Co-Pays (generic/preferred/ non-preferred) 5/15/25$310 deductible 25% co-insurance 10/25/40 Out-of-pocket max (single/couple) 700/7004,550/9,1001,500/2,000 Retiree share of premium 20% 25% Budget savings (GF)-0-$22 m$14 m
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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
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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
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Coming Attractions Summer 2011 Executive budget process starts back up Fall 2011 Special session for Congressional districting January 2012 Regular Session Showdown Time?
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www.marylandpolicy.org
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Sources ACLU of Maryland Loraine Sheehan Alcohol Tax Coalition Maryland Department of Legislative Services US Bureau of Economic Analysis US Bureau of Labor Statistics
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