October 16, 2013

Structural deficit in Md. budget comes back like skin rash

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Budget Highlights 2014Like a chronic skin rash that keeps coming back, the persistent structural deficits that legislators thought they had almost cured earlier this year are looming again for fiscal 2015, the legislature’s top budget analyst told lawmakers Wednesday.

There now appears to be a $400 million potential gap in next year’s budget, Warren Deschenaux, the chief of policy analysis, told the joint Spending Affordability Committee. A nearly $300 million surplus estimated when the fiscal 2014 budget passed in April has disappeared in the face of unplanned expenses and reduced revenues, and there may instead be an $87 million deficit. (See briefing report.)

“We’re not going to have money to carry over” into fiscal 2015, Deschenaux said, adding to what was considered a manageable $100 million “structural deficit” next year. Structural deficits mean projected increases in spending that exceed revenues because of entitlements, mandated increases, wage and price hikes.

Much of the problem is caused by $264 million in “deficiencies” in this year’s budget due to unexpected losses or spending.

Senate President Mike Miller was particularly perturbed at $167 million to be made up in the budget of the Department of Health and Mental Hygiene.

There was a loss of $70 million in cigarette restitution money due to an arbitration ruling, and $40 million to be made up in the Developmental Disabilities Administration due to federal audit penalties for overcharges and a shortfall in previous years.

The problems at DDA have persisted for years, and Deschenaux said there are still “severe financial management issues.”

“We’re back in the hole,” lamented Miller, who had proudly touted in April how the legislature had wiped out the structural deficits.

–Len Lazarick

Len@MarylandReporter.com

  • Frank_Van

    What a surprise!!! Higher costs due to a decrepit accounting system, no budgetary discipline, and after the fact political favors, inaccurately (deliberately and deceivingly) proposed.
    What a surprise of the lower revenues!!! The people of Maryland should be put in jail, since they did not live up to the expectations of the bureaucrats and dare to defy the government’s budget, again and again deliberately overstimated to make the “budget” close.
    In addition, nobody can leave Maryland any more before they have paid their “lifelong” taxes (as the state arbitrarily defines them). Sheriff of Nothingham here we come or should we say Detroit!

  • abby_adams

    You can cover up a skin rash with meds but unless you treat the underlying cause of the rash it will only erupt again. The dim bulbs in Annapolis act shocked that their wasteful spending has come back to haunt them. Will Miller be called on his boasting abt solving the shortfall issues? Probably not. It is “assume the position time” for MD taxpayers. Get ready to turn out your pocket change again to the Democrats in Annapolis. 30+ tax, toll & fee hikes aren’t enough, they need more & more & more. The wasteful spending will never stop as long as we have one party ruling this state!

  • Shawn

    In 2014 the citizens of Maryland can vote for a Libertarian Governor who will put the breaks on bad spending habits and un-needed new taxes. People and businesses are fleeing Maryland because the government is digging so deeply into their pockets that it has become an unfriendly place to live. Has these people leave they take their money and jobs with them. The only answer the two party agenda has is to grow more government to fix government. There are better ways.

  • joe

    Here’s an idea, take the state’s gambling revenue and apply it to the structural deficit. Oops, that money has been promised to 400 programs by the Democratic candidates for governor.
    Another idea is not to increase state spending for FY 15 and better yet cut state spending down from FY 14 levels for the new fiscal year. Fat chance of that happening!!

  • dc observer

    Nice scoop Len. At least I take some comfort in knowing there are internal controls in place such that MD tries to stay on top of these structural imbalances.