Democrats want state to spend more, Hogan promises to spend less

By Len Lazarick

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Democratic legislators voted Wednesday to spend as much as they could in next year’s state budget, while Gov. Larry Hogan’s budget secretary told them that wherever they set the spending ceiling, the governor would ask for less.

In another straight party line vote, the Spending Affordability Committee also set the limit on new state debt $60 million higher (6%) than the $995 million Hogan had sought.

Faced with a likely $561 million surplus this year, and an operating budget in balance for the rest of Hogan’s first term, the legislators wanted to raise spending in the fiscal 2017 budget by 4.85% and fully fund education, health and other programs.

“We need to embrace that,” said House Appropriations Committee Chair Maggie McIntosh, a Baltimore Democrat.

In an unusual move, the Spending Affordability Committee made up of fiscal leaders from both Senate and House called on Budget Secretary David Brinkley for his reaction. Just a year ago, Brinkley was a Republican senator sitting on the committee.

“The governor’s still making some major decisions,” Brinkley told them. “Whatever you do adopt, the governor is going to come in under it.”

Not out of the woods

The revenue picture has improved, “but we’re not out of the woods,” Brinkley said. “We need structural repairs in the out years,” with forecasts that deficits will return in three years.

“Let’s take our time to fix the problems,” Brinkley said.

“The governor has a right to do that,” House Speaker Michael Busch said. “We’re just putting in what we’d like to see.”

In law, Maryland has an executive budget in which the legislature can only cut the governor’s spending plan. In reality, through a series of legislation signed by past governors, 80% of the state budget is controlled by spending mandates, such as school aid, and entitlements, such as Medicaid.

The budget ceiling as proposed would fully fund all those programs, plus grant state employees a 2% cost-of-living raise and step increases based on length of service.

The governor would like to sock some of that money away to cut taxes as he promised in last year’s campaign.

The governor also wants to cap new issues of general obligation bonds at $995 million for the next five years, a move approved by the Capital Debt Affordability Committee September.

But Sen. Ed DeGrange, chair of the capital budget committee, said there are $1.7 billion in needs for building projects, and spending more will produce more jobs.

Hogan would like to reduce debt service in coming years.

Artificial constraint

Sen. Rich Madaleno, a Montgomery County Democrat who has become Hogan’s most vocal critic on spending, was upset at the preoccupation with a potential of $700 million in structural deficits over six years. “This is a completely artificial constraint,” Madaleno said.

These small deficits represent only .6% of a projected $110 billion in state spending in those six years, and the governor and legislature handled much bigger deficits in the depths of the Great Recession.

“We can manage that,” Madaleno said. “We have finally gotten back to normal.”

State employee raises

The American Federation of State, County and Municipal Employees (AFSCME) is due to have another negotiating session with the Hogan administration Thursday. They are seeking a $1,200 across the board increase for all state employees, but have yet to get a substantive response to any of their proposals, which also include a reduction in outsourcing of jobs through contracts with private firms.