ANNAPOLIS – Despite a much smaller surplus than last year, Gov. Parris Glendening presented the largest operating budget in his tenure as governor Tuesday at the Maryland State House.
The operating budget for the proposed 2002 fiscal year will total $21.3 billion, about 7 percent larger than last year’s operating budget of $19.8 billion and exceeding recommended spending caps by more than $200 million.
Education and Smart Growth anti-sprawl initiatives will get the largest of the operating budget increases.
One-third of the operating budget’s new funds – more than $400 million – are earmarked for education. The budget allocates $2.57 billion for elementary and secondary education, $203 million of which are new funds. The $1.75 billion allocated for higher education includes $202 million of new funds.
Glendening called education “the top priority,” and said the state must invest in education to remain prosperous and competitive in the business environment.
Smart Growth will receive $228 million in new funding, including $700,000 to create the Office of Special Secretary for Smart Growth.
Calling the budget “fiscally sound” and “aggressive and progressive,” Glendening acknowledged his operating budget exceeds the limit set by the Spending Affordability Committee in December.
The Spending Affordability Committee, a joint legislative committee that reviews the state’s revenues and expenditures and makes recommendations to the General Assembly, recommended a 6.95 percent growth limit. That means that Glendening must cut $235 million from his operating budget to keep it under the limit.
“Yes, we are pushing the edges of the affordability limits,” Glendening said.
Sen. Barbara Hoffman, D-Baltimore, co-chairwoman of the Spending Affordability Committee, said the Legislature would bring the budget back to the recommended limit.
“It’s doable,” she said. “It’s a challenge, but it’s certainly doable.”
Hoffman said the annual process of negotiating the budget down to the Spending Affordability Committee’s limit is a “dance” with quite challenging steps.
“We may need to peel away a little bit from a lot of things” instead of large chunks of funding from a few projects, she said.
Hoffman complimented the governor for reflecting the public’s priorities in the budget.
“It’s a very nicely balanced budget,” she said.
Republicans, however, are upset and want to rein in spending.
House Minority Leader Robert H. Kittleman, R-Howard, said the personal income growth for Maryland is only 6.2 percent.
“We would like to hold the growth to that number,” Kittleman said.
He warned of “storm clouds on the economic horizon” that could endanger the state if there is a nationwide slowdown or recession. Personal income growth estimates may shrink even more by the end of the 2002 fiscal year.
“The 6.2 figure, I think, is suspect,” he said.
Senate Minority Leader Martin Madden, R-Howard, wants to keep the budget’s growth even lower than the Spending and Affordability Committee’s limit.
“The rapid growth in the state’s operating budget is increasing at an unsustainable rate,” he said.
Madden said the state has a responsibility to avoid disastrous economic scenarios, like the $400 million cut from state-funded projects in 1991. Madden wants to avoid breaking financial promises to Marylanders.
Republicans like Kittleman also are concerned the budget’s surplus will fall below 5 percent, the minimum requirement to keep the state’s AAA bond rating.
Glendening’s budget allows for a $663 million reserve fund balance by the year’s end, $168 million more than the necessary $495 million.
“The budget maintains a healthy surplus,” the governor said.
The operating budget’s overall growth still depends on the Legislature. With the estimated $100 million in deficiency appropriations to be made, the operating budget’s growth would be a 7.8 percent increase over last year, according to Neil Bergsman, budget director in the Department of Budget and Management. Deficiency appropriations are expenses in the current fiscal year not covered by the existing budget.
If the deficiencies are not passed, the growth shrinks to 7.3 percent. Glendening has designated $41.6 million of the deficiency appropriations as extra funds for the state’s Medicaid program and $12.5 million is designated to improve public safety technology related to the arrest-warrant system, said Bergsman.
If the deficiency funds are not included, the general fund of the operating budget also is about 7 percent larger in Glendening’s new budget than last year’s budget, according to David Juppe, manager for the operating budget for the Maryland Department of Legislative Services.
Without the inclusion, the general fund is 5.9 percent larger than last year’s general fund.
Glendening said the budget is both balanced for the next five years and reflects the needs of the residents of Maryland.
“It’s very aggressive. It pushes the limits, but there are great needs out there,” he said.
Glendening will present the capital budget Thursday.