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December 19, 2008

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

$ 182.8

Teachers' and librarians' retirement

$ 130.4

Education formulas

$ 35.4

Community colleges

$ 35.8

Foster care -- increased costs, lower federal aid

$ 28.6

Mental hygiene -- enrollment growth, inflation

$ 21.1

Temporary cash assistance -- increased caseloads

$ 13.3

Sellinger aid for private higher ed

$ 10.8

Local jail reimbursements

$ 7.6

Dispairity grant to low-wealth counties

$ 6.8

St. Mary's College/Baltimore City Community College

$ 5.2

Local libararies -- formula aid

$ 3.5

Formula aid to local governments for police and health

$ 2.5

Mandated increases for agricultural devleopment/soil conservation

$ 1.2

Private donation incentive grant program

$ (1.4)

Prince George's Hospital Authority

$ 4.0

Reimbursement to local gov'ts for BRAC zone incentives

$ 2.5

Other new legislation

$ 2.5

Geographic Cost of Education Attainment phase-in

$ 49.3

Increased cost of electric universal service program

$ 15.6

Annualization of costs for new fiscal 2009 services -- DDA

$ 9.5

Medicaid -- phase two of dental rate increases

$ 7.0

University System of Maryland/Morgan State

$ 83.0

Higher education investment funds replaced with general funds (USM and Morgan)

$ 66.9

2 percent general salary increase

$ 64.2

Employee retirement

$ 48.7

Employee and retiree health insurance

$ 42.0

Provider rate increase of 3.58% (DDA, MHA, ADAA)

$ 38.0

Employee increments

$ 35.0

Major information technology projects

$ 28.2

Juvenile services -- 2009 underfunding/unavailability of federal funds

$ 18.2

Correctional institutions overtime costs

$ 12.0

Increase in electricity, natural gas and propane

$ 10.6

Clifton T. Perkins Hospital Center -- opening of new ward

$ 9.7

Correctional institutions: inmate medical contract

$ 7.0

Increase in vehicle fuel

$ 6.3

Workers compensation premiums

$ 5.0

New judgships and related personnel

$ 4.8

Additional public defenders to meet caseload standards

$ 4.6

Need-based scholarships

$ 3.8

Breast and cervical cancer program -- cost growing 5% per year

$ 3.5

Higher ed investment funds for workforce development grants replaced by general funds

$ 3.0

Correctional institutions -- increased prison population and food contracts

$ 2.4

Other changes

$ 1.5

Rosewood closure -- savings

$ (18.5)

Public safety communication system

$ 10.0

Housing programs

$ 3.4

Drinking water and water quality programs -- less federal funds to match

$ (1.9)

Other PAYGO

$ (2.2)

Transfer to MTA for ICC

$ (22.0)

Unappropriated fund balance from FY 2008

$ 175.7

Remove excess FY 2007 fund balance

$ (146.5)

Total:

$ 1,070.4

Posted by Andy Green at 12:00 PM | | Comments (1)
        

Comments

Nice breakdown Andy...more people need to learn 1. the State budget, what it entails and how it is spent and made up and 2. the MD State Constitution and OUR laws...especially those governing OUR legislators and the legislative process!

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About the bloggers
Annie Linskey covers state politics and government for The Baltimore Sun. Previously, as a City Hall reporter, she wrote about the corruption trial of Mayor Sheila Dixon and kept a close eye on city spending. Originally from Connecticut, Annie has also lived in Phnom Penh, Cambodia, where she reported on war crimes tribunals and landmines. She lives in Canton.

John Fritze has covered politics and government at the local, state and federal levels for more than a decade and is now The Baltimore Sun’s Washington correspondent. He previously wrote about Congress for USA TODAY, where he led coverage of the health care overhaul debate and the 2010 election. A native of Albany, N.Y., he currently lives in Montgomery County.

Julie Scharper covers City Hall and Baltimore politics. A native of Baltimore County, she graduated from The Johns Hopkins University in 2001 and spent two years teaching in Honduras before joining The Baltimore Sun. She has followed the Amish community of Nickel Mines, Pa., in the year after a schoolhouse massacre, reported on courts and crime in Anne Arundel County, and chronicled the unique personalities and places of Baltimore City and its surrounding counties.
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