ANNAPOLIS – Maryland is spending about $200 million more than it anticipated at this time in a number of key areas, particularly mental hygiene and Medicaid, legislative analysts told lawmakers Tuesday.
That’s covered by an unexpected windfall of $330 million from the federal government and $200 million worth of cuts made by the Board of Public Works this summer, but that won’t be the case when the state begins to write its new budget in January.
If spending in those programs remains the same, they could push the state’s expected budget deficit to $1 billion for the next fiscal year — the previous $800 million, plus the $200 million in new expenses that will no longer be covered by the one-time fixes.
The briefing by the legislative Office of Policy Analysis was the first of two sessions designed to help lawmakers determine how much the current budget of $22.4 billion can increase during the next fiscal year
“As we look forward, the federal money won’t be there, but these deficiencies will,” said Warren Deschenaux, director of the Office of Policy Analysis. “That combined with a big built-in increase for education is going to make things tougher in 2005.”
Deschenaux referred to the projected $365 million needed to fund the Thornton education initiative this year, which increases spending for public schools statewide.
During the next legislative session, lawmakers will have to decide how much of that amount can be realistically budgeted, given that Medicaid and the state children’s health program are now $97 million more for 2003, mental health is nearly $63 million more and child care subsidies are nearly $10 million more.
“It is not unexpected, we have been looking at this for quite a while,” said Delegate Anne Healey, D-Prince George’s. “It is always a problem when there is a downturn in the economy, we need more unemployment benefits, health care costs increase and people need more services.”
Damage from Hurricane Isabel further complicated matters, although estimates are not in yet for Maryland’s total cost.
“There were already deficiencies, and then there was the hurricane,” Deschenaux said.
Despite the shortfalls, Deschenaux said it is unlikely the governor will decide to revise this year’s budget. He suspects that there may even be a surplus at the end of the year because of the federal bail-out money and a lower-than-anticipated revenue shortfall.
“We shouldn’t need to do anything dramatic this year,” he said.
Although this meeting was geared toward discussion of the status of the state’s general fund, the next meeting, scheduled for Nov. 12 will examine the condition of current funding for higher education and the Transportation Trust Fund — both of which were targeted to help balance this year’s budget.
“That is what we have been hearing in terms of these shortfalls,” said Sen. J. Lowell Stoltzfus, R-Somerset. “It is going to be a very tough couple of years until the economy bounces back.”