Structural deficit in Md. budget comes back like skin rash

Print More

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