Maryland faces a shortfall of nearly $600 million in its next operating budget and larger gaps in years to come, legislative analysts said Wednesday, a fiscal forecast that poses an immediate challenge to Gov.-elect Larry Hogan.
While Maryland has weathered the worst of the recession, revenue collections continue to be sluggish, and the state has “yet to fully resolve its fiscal problems,” said Warren G. Deschenaux, the legislature’s chief budget analyst.
The projections were not totally unexpected, but they put a spotlight on the incoming Republican governor’s agenda just over a week after his upset victory in the heavily Democratic state. Hogan campaigned on promises to cut spending in Annapolis and roll back as many as possible of the tax increases enacted under Gov. Martin O’Malley (D).
Some leading Democrats said tax cuts would be ill-advised at a time when revenue is already projected to fall well short of spending in the state’s $16 billion general-fund budget.
“I think it will be very hard lowering revenues when you have a shortfall of this nature,” said House Speaker Michael E. Busch (D-Anne Arundel).
Sen. Richard S. Madaleno Jr. (D-Montogmery) said reducing taxes significantly in the current budget scenario could require “major cost shifts onto the backs of the likes of college students and working families.”
Hogan, an Anne Arundel County businessman, blamed those who have been in power for the projected shortfalls, which Deschenaux presented during a briefing for state lawmakers in Annapolis.
“Obviously, they’ve been spending too much,” Hogan said, adding that he was undaunted by the budget outlook. “We know about all of these issues. That’s why I ran for governor.”
The governor-elect spoke at a news conference called to announce the newest member of his transition team: Robert R. Neall, a former lawmaker who remains well-known in Annapolis and will advise Hogan on budget and tax issues.
“He is not only been a close personal friend of mine for several decades, but he’s the most respected fiscal mind in the state of Maryland,” Hogan said. “There’s nobody in the state that knows tax and fiscal budget issues better than Bobby Neall does.”
Neall has served in the House of Delegates, as Anne Arundel county executive and in the state Senate. He began his political career as a Republican, but switched parties in 1999, midway through his Senate tenure.
He has served on numerous state boards, task forces and committees, including one that monitors growth in the Maryland state budget.
Neall said he plans to help Hogan make a number of important decisions quickly, ahead of his Jan. 21 inauguration. Hogan will inherit a budget largely crafted by the O’Malley administration but will have an opportunity to put his imprint on it before submitting the document to lawmakers shortly after he is sworn in.
Nonpartisan legislative analysts estimated a shortfall of $593 million next year and, if planned spending levels remain intact, a gap of more than $1 billion by fiscal 2020.
During O’Malley’s eight-year tenure, analysts also frequently projected budget shortfalls, as the economy struggled to recover from the recession. O’Malley closed several gaps with a combination of spending cuts and tax increases. Still, the briefing on Wednesday left Republican lawmakers lamenting the fiscal situation that Hogan is inheriting.
“Larry gets the keys to the governor’s mansion. The lights are off, and he’s left to pay the power bill,” said House Minority Whip Kathy Szeliga (R-Baltimore County).
Hogan has said his first priority in office will be cutting spending. While he made tax cuts a rallying cry of his campaign, Hogan has said very little about which taxes he would cut, how deeply or how quickly.
At the news conference, he announced a new Web site for people seeking jobs in his administration — www.hogantransition.com — and detailed the division of labor among senior members of his transition team.
Lt. Gov.-elect Boyd Rutherford will lead a review of “every single agency” in state government in coming months, Hogan said, while James T. Brady, a Cabinet official in the administration of Parris N. Glendening (D), will oversee senior personnel picks.
Hogan said he is appointing Carville Collins, a lawyer and lobbyist with DLA Piper, to serve as counsel to his transition team. Collins’s practice includes representing clients before the state Public Service Commission, which regulates utilities.
The governor-elect said he had “a very productive breakfast” Wednesday with Senate President Thomas V. Mike Miller Jr. (D-Calvert) and is scheduled to meet Thursday with Busch. Meetings were also on the calendar with Comptroller Peter Franchot (D) and Treasurer Nancy K. Kopp (D).
“We’ve been making a lot of progress, some of which you’ve seen and some of which you haven’t seen,” Hogan told reporters. “We’re doing a lot of work behind closed doors.”
Hogan also elaborated on his recent comment that he does not plan to speak publicly on substantive policy issues before he is sworn in.
“To me, it doesn’t make any sense to roll out major policy initiatives or major positions on things until you’ve assembled the team of advisers who are going to help you make those decisions to implement the policy,” Hogan said Wednesday. “I think you’re trying to put the cart before the horse.”