Maryland’s Democratic-controlled General Assembly took steps Wednesday to begin restoring cuts made by Gov. Larry Hogan (R) in his first budget proposal, setting the stage for a possible showdown with the Republican leader over how to shore up the state’s fiscal health.
The full House is expected to take its first vote on its changes to the budget next week, after the House Appropriations Committee votes on the proposal Friday.
The plan, which must also be considered by the Senate before reaching Hogan’s desk, will probably restore cuts made by Hogan to Medicaid reimbursements, K-12 education funding and state employees’ salaries.
In order to restore some of the funding for the programs, the General Assembly is pushing a plan that would cut the state’s payments to the employee pension plan, an idea that both Hogan and Comptroller Peter Franchot (D) strongly oppose.
“We set goals for ourselves from the outset,” said House Speaker Michael E. Busch (D-Anne Arundel), referencing meetings that were held by the Democratic caucus after Hogan’s budget presentation in late January. “And when our budget comes out next week, you’ll see K-12 has been fully funded at the expectation they thought they would receive.”
Busch said the budget proposal also will restore a 2 percent pay increase to state employees, which Hogan wanted to eliminate to help bridge a revenue shortfall. “We think we have a moral commitment to our state employees to make sure they are treated fairly as well,” Busch said.
Several panels of the House Appropriations Committee on Wednesday voted on recommendations that would allow for the restoration of Medicaid coverage for pregnant women whose income levels were slightly above the regular eligibility for the federal program, and on full funding for some of the state’s most expensive public school systems.
Hogan had proposed halving a special supplement that those schools receive as a cost-saving measure.
He also wanted to reduce the rate of increase for all the state’s public school systems, a change that Democratic lawmakers said they also will try to reverse by proposing other ways to fund the budget.
On Friday, the full House Appropriations Committee will vote on the actions taken up by the subcommittees and consider the full budget plan. The General Assembly cannot add money to the budget. It can only make cuts and then offer suggestions on where to add. “We are really going to try to have a budget that comes out that does not tear the safety net apart,” said Del. Maggie L. McIntosh (D-Baltimore).
The budget talks took place as the state Board of Revenue Estimates released its report on how much money the state will take in next year. The numbers remain unchanged from its December projections: The state is projected to bring in $15.7 billion this year and $16.2 billion next year.
Without new money available, Democratic lawmakers said Wednesday that they will look to shift money from programs that are overfunded and save tens of millions by changing the way the state funds employee pensions.
“What we’ve done, and what we would have hoped the governor would have done before making these huge cuts, is looked at overfunded programs, waste, areas where we could find money,” said Del. Benjamin S. Barnes (D-Prince George’s), vice chairman of the appropriation committee’s education subcommittee.
Barnes said the delegates cut $10 million in funds left over from a federal grant to the Temporary Cash Assistance Program. Another $20 million is being taken from Medicaid, the insurance program for the poor, which Barnes said was “overbudgeted” last year.
Legislative leaders want to phase out the pension system’s “corridor funding” method, which allows the state to contribute to the pension system at prior-year levels. Instead, lawmakers want to adopt what they said was the more commonly used actuarial method, a move that they said would save the state an estimated $60 million next year.
Hogan and Franchot are strongly opposed to the idea, arguing that it could harm the state financially over the long term.
“The comptroller . . . has serious concerns about the latest proposal to reduce the amount of the state’s pension contribution,” said Andrew Friedson, a spokesman for Franchot. He said the plan would “add billions in additional costs over the years to come.”
Busch said he has been in communication with Hogan and has repeatedly told him that the House budget plan would include full funding for education. The Senate has also said education funding is a top priority.
It remains unclear how Hogan will respond to the changes the House appropriations committee plans to propose.
“The governor has a right to have input,” Busch said. “He has veto power. He’s got all those tools to use. They are all available to him. Our job is to set the priorities that we believe are important and that’s what we’ve gone about doing.”