Governor Larry Hogan Delivers State Fiscal Update
Administration Requires Fiscal Restraint, Fully Funds Obligations, Calls for Bipartisan and Predictable Budget Reform
ANNAPOLIS, MD - Governor Larry Hogan today delivered an update on Maryland's fiscal outlook, in advance of the Fiscal Year 2017 budget, which the governor will submit to the General Assembly during the upcoming legislative session.
As announced by the governor, the FY 2017 operating budget will total $17.1 billion, which will include a Rainy Day Fund balance of $1.1 billion and a cash balance of $445 million going into FY 2018. In 2015, the Hogan administration inherited $5.1 billion in accumulated structural deficits, including a $2.1 billion deficit in 2015 and 2016. Over the course of the last year, almost 90 percent of that inherited $5.1 billion deficit has been eliminated. The governor's proposed budget will continue to build on this progress and provide for sound fiscal management in future years.
"Our administration has said repeatedly that we would bring fiscal restraint back to Annapolis, hold the line on spending, and increase funding for top priorities like education and infrastructure. This year's budget accomplishes all those things," said Governor Hogan. "I hope that it will set the stage for bipartisanship, cooperation, and continued fiscal responsibility."
Additionally, Governor Hogan announced his intent to propose tax-relief legislation that will deliver approximately $400 million in tax and fee cuts to an estimated 1 million Maryland citizens and to over 300,000 small businesses over the next five years. The Marylanders who will benefit the most under the governor's tax proposals will be the ones who have been struggling the most: families, retirees, and small business owners.
Finally, the governor called for bipartisan, predictable, and common-sense budget reform. Currently, mandated spending accounts for 83 percent of the operating budget, a major driver of unsustainable spending and debt. By FY 2021, the state will be required to spend $3 billion more per year than it does today. To address this issue, the Hogan administration will introduce a bill that aims to control mandated spending increases in years when revenues are down and do not keep pace with the statutory increases.
Highlights of the governor's FY 2017 proposed budget include:
- $17.1 billion operating budget
- $1.1 billion Rainy Day Fund balance
- Approximately $440 million cash balance going into FY 2018
- Fully funds every single General Assembly statutory spending obligation
- Delivers approximately $400 million in tax and fee relief to an estimated 1 million Maryland citizens and to over 300,000 small businesses over the next five years
- Fully funds 100 percent of education spending increases - based on the formulas set by the legislature
- Fully funds the Geographic Cost of Education Index (GCEI)
- $6.3 billion for K-12 education, an increase of $140 million
- $314 million for new school construction projects
- $231 million in highway user revenues - an increase of 18.9%
- $7.3 billion in aid to local governments - an increase of 3.3%
- Sets capital debt limit at $995 million - below the level proposed by the legislature
- $35 million to address the long-standing deficiencies accrued by the previous administration
