HOUSE REPUBLICAN CAUCUS Fiscal Vision for Maryland. March 1, 2011

Transcription

1 Fiscal Vision for Maryland March 1,

2 Fiscal 2012 Budget Review of Governor s Budget Plan 2

3 Analysis of Governor s FY 2012 Budget Actions (a) Estimated Baseline Cash Deficit (Dec.) $(1,582) Cuts in Baseline Spending $670 Special Fund Raids (b) 325 Tax & Fee Increases 245 Wishful Thinking (Lower Deficiencies) 243 Federal Stimulus 124 Other 70 Total Actions $1,677 Fund Balance Projected for FY 2012 $95 (a) Recategorized from official categories. (b) Includes raid on TTF and $191 million in bonding to replace diverted Special Funds (POS and BRF). 3

4 Cuts from Baseline $670 (40%) Governor s Budget Actions Diversions and Transfers $325 (19%) Other $70 (4%) Federal Stimulus $124 (7%) Wishful Thinking $243 (14%) Tax & Fee Increases $245 (15%) 4

5 Total Operating Budget Governor s Plan $36.0 $34.0 $32.0 The Governor has proposed a $1 billion spending increase in the Total Operating Budget. $30.9 $32.0 $33.1 $34.1* $30.0 $28.8 $29.6 $28.0 $26.0 $ *Governor s Proposal 5

6 Governor s Budget Spending Summary Actual Working Proposed by Governor Change 2012 vs Dollars Percent General Fund $14.2 $14.5 $14.4 $13.4 $13.2 $14.6 $ % State Funds $22.4 $23.0 $23.1 $22.2 $22.8 $24.8 $ % Total Operating $28.8 $29.6 $30.9 $32.0 $33.1 $34.1 $1.0 (a) 3.1% Budget (All Funds) (a) Major increases include Medicaid (up $828 million or 13.6%), Health (up $115 million or 4.3%), and Higher Ed (up $96 million or 2.0%). 6

7 Total Operating Budget: 1979-Present ($ in billions) $35.0 $30.0 $25.0 $20.0 The Governor s Budget Plan continues a long-term pattern of unsustainable increases in spending. $15.0 $10.0 $5.0 $0.0 *Governor s Proposal 7

8 GF Cash Balance Deficits Under Governor s Plan ($ in millions) $1,000 $500 $680 $95 The Governor s Plan does not solve the deficit and will lead to future tax increases. $0 -$500 -$1,000 -$1,500 -$1,100 -$1,148 -$1,

9 Fiscal 2012 Budget GOP Budget Plan 9

10 We envision Vision for Maryland A smaller, less-intrusive State government. A State government that operates consistently within its means. A reduced tax burden on Maryland citizens. 10

11 Missed Opportunities Session Proposal Cumulative Impact to Today 2003 Enact slots legislation. $ billion 2004 Retain 5% trigger provision for education. $4.5 billion 2007 Constrain budget growth to 1.5% (up $200 million) and cap GF spending to $13.8 billion in FY (special) Adopt slow-growth budget in FY 2009 (3.5% growth) and free-market slots plan. $2.8 billion $1.8 billion 2008 Reduce growth in GF spending to 2.6% for FY 09. $1.2 billion 2009 Reduce total budget growth to 0% for FY 10. $1.2 billion 2010 Reduce GF spending by 2.7% for FY 11. $725 million 11

12 GOP Fiscal Goals (i) Achieve a positive General Fund balance in each of the next five years without raising taxes. (ii) Achieve a structurally balanced General Fund budget by (iii) Reduce the tax burden on Maryland citizens: Reverse the 2007 sales tax increase. Reverse the 2007 corporate tax increase. 12

13 GOP Fiscal Goals (Continued) (iv) Reject the Governor s proposal to raid the Bay Restoration Fund and Project Open Space and to replace the funds with new debt. (v) Replenish the Transportation Trust Fund without an increase in the gas tax. (vi) Maintain the Rainy Day Fund and strong general fund balances. 13

14 Action Steps for FY 2012 Implement an additional $621 million of spending reductions in FY 12. $518 million decrease (3.5%) from FY Cancel proposed raids on Bay Restoration Fund and Project Open Space. Cancel raid on TTF. 14

15 Action Steps in Future Years (FY ) Constrain growth in the General Fund: 2013: 2% 2014: 2% 2015: 2% 2016: 4% Restore $500 million to the TTF (FY ) Repeal the Special Session tax increases: Reduce sales tax rate from 6% currently to 5.5% in FY 2014 and 5% in FY Reduce corporate income tax from 8.25% to 7.0% beginning in FY

16 $18.0 General Fund Program Spending Comparison Governor s Proposal Increase: $2.2 Billion ($ in Billions) $18.0 GOP House Proposal Increase: $354 Million $17.0 $17.0 $17.0 $16.3 $16.0 $15.0 $14.8 $14.9 $15.6 $16.0 $15.0 $14.8 $14.2 $14.5 $14.8 $15.1 $14.0 $14.0 $ $

17 General Fund Budget Surplus/(Deficit) Comparison (Cash-Basis Standard) ($ in Millions) $1,000 $680 $500 $95 $0 ($500) Governor s Proposal* $1,000 $500 $0 ($500) ($1,000) GOP House Proposal* $680 $609 $527 $434 $375 ($1,000) ($1,500) ($1,500) ($2,000) ($1,148) ($1,100) ($1,175) ($2,500) * DLS estimates *DLS estimates adjusted for GOP actions 17

18 General Fund Budget Surplus/(Deficit) Comparison ( Structural Balance Standard) ($ in Millions) Governor s Proposal GOP House Proposal $0 $0 $25 $1 $30 ($400) ($400) ($426) ($800) ($800) ($1,200) ($1,600) ($1,562) ($1,170) ($1,155) ($1,188) ($1,185) ($1,200) ($1,600) ($1,562) ($2,000) ($2,000) ($2,400) ($2,400)

19 Summary The Governor s Plan: Relies too heavily on transfers, taxes & fees and wishful thinking Continues a pattern of unsustainable growth in spending Does not eliminate the deficit The GOP Plan: Represents new vision for Maryland Reduces unsustainable levels of spending Balances the State budget structurally Reduces the tax burden on Maryland citizens Cancels raids on the TTF, BRF and POS Increases funding to the TTF without a gas tax hike 19

20 Governor's General Fund Budget ($ in Millions) Avg Annual FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Change Revenues Actual Work. App. Allowance Est. Est. Est. Est Opening Fund Balance $87 $344 $680 $95 $0 $0 $0 Transfers One-time Revenues/Legislation Subtotal One-time Revenue $922 $704 $1,032 $148 $58 $61 $ % Ongoing Revenues* $12,864 $13,204 $13,699 $14,425 $15,128 $15,820 $16,514 Revenue Adjustments Legislation Subtotal Ongoing Revenue $12,864 $13,204 $13,699 $14,425 $15,128 $15,820 $16, % Total Revenues & Fund Balance $13,786 $13,908 $14,731 $14,573 $15,186 $15,880 $16, % Ongoing Spending Operating Spending** $14,494 $14,837 $15,271 $16,188 $16,958 $17,736 $18,542 VLT Revenues Supporting Education Multi-year Commitments Ongoing Reductions Subtotal Ongoing Spending $14,489 $14,766 $14,869 $15,613 $16,283 $17,005 $17, % One-time Spending PAYGO Capital $0 $1 $0 $11 $1 $1 $1 One-time Reductions One-time Fund Swaps Federal Stimulus Funds*** -1,161-1, Appropriation to Rainy Day Fund Subtotal One-time Spending -$1,046 -$1,538 -$233 $61 $51 $51 $51 n/a Total Spending $13,442 $13,229 $14,636 $15,674 $16,334 $17,056 $17, % Ending Balance $344 $680 $95 -$1,100 -$1,148 -$1,175 -$1,224 Rainy Day Fund Balance Balance over 5% of GF Revenues As % of GF Revenues 4.87% 4.72% 5.01% 5.00% 5.00% 5.00% 5.00% Structural Balance -$1,625 -$1,562 -$1,170 -$1,188 -$1,155 -$1,185 -$1,237 GF: general funds PAYGO: pay-as-you-go VLT: video lottery terminal * Includes effect of federal tax legislation enacted in December 2010 and federal employee pay freeze. ** Includes $337 million in fiscal 2011 deficiency appropriations and $1,206 million in the American Recovery and Reinvestment Act of 2009 spending supplanting general funds. *** Includes $18.4 million from federal Education Jobs Grant Top budget amendment that offset loss of VLT revenues.

21 GOP General Fund Budget ($ in Millions) Avg Annual FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Change Revenues Actual Work. App. Allowance Est. Est. Est. Est Opening Fund Balance $87 $344 $680 $609 $527 $434 $374 Transfers One-time Revenues/Legislation Subtotal One-time Revenue $922 $704 $841 $562 $484 $395 $ % Ongoing Revenues* $12,864 $13,204 $13,823 $14,559 $14,826 $15,151 $15,823 Revenue Adjustments Legislation Subtotal Ongoing Revenue $12,864 $13,204 $13,823 $14,559 $14,826 $15,151 $15, % Total Revenues & Fund Balance $13,786 $13,908 $14,664 $15,121 $15,311 $15,546 $16, % Ongoing Spending Operating Spending** $14,494 $14,837 $15,271 $16,188 $16,958 $17,736 $18,542 VLT Revenues Supporting Education Multi-year Commitments Ongoing Reductions ,392-1,737-2,168-2,317 Subtotal Ongoing Spending $14,489 $14,766 $14,248 $14,534 $14,825 $15,121 $15, % One-time Spending PAYGO Capital $0 $1 $0 $11 $1 $1 $1 One-time Reductions One-time Fund Swaps Federal Stimulus Funds*** -1,161-1, Appropriation to Rainy Day Fund Subtotal One-time Spending -$1,046 -$1,538 -$193 $61 $51 $51 $51 n/a Total Spending $13,442 $13,229 $14,055 $14,595 $14,876 $15,172 $15, % Ending Balance $344 $680 $609 $527 $434 $374 $384 Rainy Day Fund Balance Balance over 5% of GF Revenues As % of GF Revenues 4.87% 4.72% 5.01% 5.00% 5.00% 5.00% 5.00% Structural Balance -$1,625 -$1,562 -$425 $25 $1 $30 $97 GF: general funds PAYGO: pay-as-you-go VLT: video lottery terminal * Includes effect of federal tax legislation enacted in December 2010 and federal employee pay freeze. ** Includes $337 million in fiscal 2011 deficiency appropriations and $1,206 million in the American Recovery and Reinvestment Act of 2009 spending supplanting general funds. *** Includes $18.4 million from federal Education Jobs Grant Top budget amendment that offset loss of VLT revenues.

22 03/01/2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Estimated Balance (Governor's Plan) , , , ,224.0 Additional Balance from Previous Year Due to Additional Budget Actions Additional General Fund Revenues under GOP Plan Less Sales Tax to MDOT to Reflect Lower State Mass Transit Subsidies $124.0 $132.0 $139.0 $144.0 $150.0 Chesapeake 2010 Fund -- Level Fund at $20 million Admissions and Amusement Tax on Electronic Bingo &Tip Jars Portion of Baltimore City Share of Highway User Revenues $190.0 $142.0 $154.0 $164.0 $175.0 Additional General Fund Expenditure Savings under GOP Plan Eliminate Legislative Scholarship Programs No Graduate and Professional Scholarship Program Delete Geographic Cost of Education Index Funding Formula Base Education Aid Formula on Average Daily Attendance Retirement Savings from GCEI and ADA Changes Phase-out Education Supplemental Grant Over Two Years Eliminate Quality Teacher Incentive Stipends (50% Funding in Fiscal 2012) Continue 1% Cap on Education Aid Inflation Factors Community College Formula -- Freeze at 19.5% of Four Years' Per Student Baltimore City Community College % of Four Years' Per Student Sellinger Formula -- Freeze at 10.0% of Four Years' Per Student Share Administrative Costs of Retirement Agency with Locals Charge Counties for Costs of Local Parole Hearings and Investigations Halve Subsidy for Baltimore City and Ocean City Convention Centers No Grants for Stem Cell Research Eliminate Sustainable Communities Tax Credit Program Eliminate Living Wage for State Contracts Proposed Non-Statutory Budgetary Reductions -- See Separate Schedule $621.0 $689.3 $744.7 $763.9 $819.7 Modifications to BRFA (HB 72) under GOP Plan Do Not Impose Insurance Premium Tax on Injured Workers Ins. Fund One-Half of Retirement Savings or Equivalent Savings from Alternative Plan No Bad Driver Surcharge Forego Shifting Bay Restoration, Transfer Tax, and POS to Bonds No Transfers from Transportation/Augment MDOT Revenues in Out-Years $ $64.4 $6.6 $12.8 $19.8 Net Impact of Additional Budget Actions Compared to Governor's Plan $514.0 $766.9 $905.3 $940.7 $1,014.5 BRFA: Budget Reconciliation and Financing Act MDOT: Maryland Department of Transportation Deficit Reduction Financing Act (HB 1294) ($ in Millions)

23 03/01/2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Higher Education Efficiencies -- 5% General Fund Savings Reduce Higher Education Positions Scale Back Travel/Reduce Vehicle Fleet Reduce Free Tuition for USM Employees Reduce General Funds for USM System Office -- Assess Constituent Institutions Consolidate Center for Environmental Science (UMCES) with Other Colleges New Complete College Grant ($1 million)/harry Hughes Center ($200,000) New Keep Maryland Community Colleges Affordable Grant Not Affordable Eliminate Fine Arts Grants -- Aid to Education Special Crime Grants -- Reduce 10% Increase Turnover to Be Consistent with Current Vacancy Rate -- Parole & Probation Medicaid -- Limit Non-emergency Outpatient Hospital Visits/Reduce Error Rates Eliminate Medicaid Funded Abortions Prince George's County Hospital -- No Plan Forthcoming Reduce Residential Capacity at Regional Institutes for Children -- MHA Less Funding for Maryland Public Television Reduce Maryland Zoo Grant by 10% No New General Funds for Various Economic Development Grant & Loan Programs Reduce Biotechnology Tax Credit Reduce Prevailing Wage Unit to Mandated Level Eliminate One-Time $750 Bonus for State Employees Employee Health Benefit Savings Per Benefits Sustainability Commission Reduce Operating Expenditures Judiciary Reduce Funds for Retired Judges & New Bailiffs AG -- Reduce Funds for Legal Counsel and Advice -- Recover Costs from Agencies Eliminate State Positions Vacant for Over One Year State Agency Operation Expenses -- 2% Across-the-Board Reduce Office of the Secretary Budgets by 2% Moratorium on Out-of-State Travel No Funding for Advertising Reduce Electricity Costs by 5% Reduce Executive Salaries to $1 Below Governor Delete Funding for Statewide Personnel System IT Project Governor's Delivery Unit & Health Policy Group Not Essential $244.4 $261.6 $268.3 $267.7 $255.8 AG: Attorney General MHA: Mental Hygiene Administration USM: University System of Maryland Detail for Proposed Budgetary Reductions ($ in Millions)