If the state budget is growing, why are there cuts?
This week's Spending Affordability Committee report touches on one of the mysteries of the state budget. The committee decided that the budget could be allowed to grow by about 0.7 percent next year, a level that its members said would require massive spending cuts.
Huh? The budget is growing, so we have to cut the budget? Doesn't seem to make much sense, does it?
Here's the explanation: Various things the state spends money on are tied to formulas that grow whether tax revenues do or not. For example, the state spends a certain amount per student in public school, so if enrollment grows, the state budget grows. Ditto with the prison population. Then there are costs like state worker health care. Just giving state workers the same benefits they got this year will cost quite a bit more next year.
The Department of Legislative Services does an exercise in which it figures out a "baseline budget" showing how much more it will likely cost next year just to hold state services steady. Their estimate for next year is a little bit over $1 billion. That's a problem when state tax revenues are, at latest estimate, expected to grow by something like $100 million next year.
So is everything in the baseline budget really necessary? Listed below are all the items that are expected to increase in cost next year (per the spending affordability committe report). Take a look for yourself; some of them may seem more crucial than others.
Items expected to grow in cost in the fiscal 2010 budget. Numbers in millions.
Medical assistance -- enrollment growth, inflation, managed care rates
Teachers' and librarians' retirement
Foster care -- increased costs, lower federal aid
Mental hygiene -- enrollment growth, inflation
Temporary cash assistance -- increased caseloads
Sellinger aid for private higher ed
Local jail reimbursements
Dispairity grant to low-wealth counties
St. Mary's College/Baltimore City Community College
Local libararies -- formula aid
Formula aid to local governments for police and health
Mandated increases for agricultural devleopment/soil conservation
Private donation incentive grant program
Prince George's Hospital Authority
Reimbursement to local gov'ts for BRAC zone incentives
Other new legislation
Geographic Cost of Education Attainment phase-in
Increased cost of electric universal service program
Annualization of costs for new fiscal 2009 services -- DDA
Medicaid -- phase two of dental rate increases
University System of Maryland/Morgan State
Higher education investment funds replaced with general funds (USM and Morgan)
2 percent general salary increase
Employee and retiree health insurance
Provider rate increase of 3.58% (DDA, MHA, ADAA)
Major information technology projects
Juvenile services -- 2009 underfunding/unavailability of federal funds
Correctional institutions overtime costs
Increase in electricity, natural gas and propane
Clifton T. Perkins Hospital Center -- opening of new ward
Correctional institutions: inmate medical contract
Increase in vehicle fuel
Workers compensation premiums
New judgships and related personnel
Additional public defenders to meet caseload standards
Breast and cervical cancer program -- cost growing 5% per year
Higher ed investment funds for workforce development grants replaced by general funds
Correctional institutions -- increased prison population and food contracts
Rosewood closure -- savings
Public safety communication system
Drinking water and water quality programs -- less federal funds to match
Transfer to MTA for ICC
Unappropriated fund balance from FY 2008
Remove excess FY 2007 fund balance