Maryland Gov. Wes Moore is again warning that the state’s financial outlook is cloudy, but he stopped short of offering specific solutions during a speech to county leaders in Ocean City on Saturday.
Moore, a Democrat, touted his accomplishments in his first year and a half in office, including accelerating a minimum wage increase, boosting childcare assistance for working families and implementing a service program for young adults. Those investments, he said, will pay dividends in boosting the economy, and, in turn, the state’s finances. But he said there’s more difficult work ahead.
“I want to be clear: The next leg of this mission to address our fiscal challenges, it will be harder than the last one,” Moore said. “And, right now, everything is on the table.”
Moore’s remarks came at the close of the Maryland Association of Counties annual conference, which draws thousands of local and state officials to the beach to hash out policy issues, along with an unofficial roster of political fundraisers and receptions.
Coming down from a ‘sugar high’
The heart of the state’s budget problem is that projections show it will not have enough money coming in — through taxes, fees and other sources — to pay for government programs in the years ahead. The problem is exacerbated by the drying up of federal coronavirus pandemic aid at the same time that an ambitious and expensive public school improvement plan is being implemented.
The state’s $63 billion budget was artificially bloated in prior years by the coronavirus aid, Moore said, taking a dig at his predecessor, Republican Gov. Larry Hogan, who has boasted of leaving office with a budget surplus. (Hogan is running for the U.S. Senate against Democrat Angela Alsobrooks, the Prince George’s County executive who is one of the governor’s political allies.)
The COVID aid, Moore said, “is not a structural surplus. It is a sugar high.”
The state also is short of funds for planned transportation projects, with gas taxes and other sources not bringing in enough money to pay for road and bridge improvements, let alone the planned Red Line transit project in Baltimore.
If left unaddressed, the budget shortfall would balloon into the billions of dollars. But the state is required to pass a balanced budget each year — so the question is how the shortfall will be fixed. The scope of the challenge will become clearer in late September, when a new round of financial projections is made.
As the budget problems became apparent last year, Moore gave a similar cautious warning at the same summer conference. In his next budget after that, Moore made strategic cuts to government programs, which he called a “rebasing” of funds. In some cases, he rolled funding back to pre-pandemic levels.
Then state lawmakers, after negotiations that were briefly tense, agreed to a series of targeted fee and tax increases. They raised vehicle registration and other fees but held off on any broad-based tax increases.
Justifying spending
Moore gave only broad hints about his approach to the next budget. He said state agencies will be required to offer evidence to justify requests for new or increased spending.
“This administration doesn’t move on blind hope. We don’t do blind hope. We move on data,” Moore said.
Moore did not mention new or increased taxes, or other ways of raising new money, as options in his speech. But one day earlier he told reporters he has an “extremely high bar” for raising money through taxes or fees.
During his speech, Moore indicated a reluctance to roll back or significantly rework the public education improvement plan, known as the Blueprint for Maryland’s Future.
The Blueprint requires the state and the counties to pour more money into specific educational efforts, such as increasing teacher pay, expanding prekindergarten, improving career- and college-prep programs and offering community services in high-need and high-poverty schools.
“I am fully committed to implementing the Blueprint for Maryland’s Future,” Moore said, calling it one of the “most consequential” bills ever to pass the state legislature.
Still, laws — especially the most important and complex ones — often need tweaking, the governor said. Since the Blueprint plan was conceived in 2016 and approved in 2020, there have been changes in education and society that could necessitate updates to the programs.
“We’ve got a once-in-a-generation opportunity to make Maryland once again a leader in public education. And I believe deeply that we can seize that opportunity,” Moore said.
Tough decisions looming
State Sen. Steve Hershey, the top-ranking Republican in the Senate, said he was pleased the governor did not mention raising taxes, while appreciating the directive to state agencies to justify their spending.
“He said the state had to live within its means. That’s something Republicans have been talking about for a very long period of time,” said Hershey, who represents a district on the Eastern Shore. “We’ll have to see the details on how that’s done.”
Montgomery County Executive Marc Elrich, a Democrat, said he was pleased to hear the Blueprint will be supported and perhaps improved. But he’d like to see the state revise the tax system to make it fairer while raising money, particularly through corporate tax reform.
“Instead of looking at this as, ‘My God, we can’t come back to our residents for more money,’ maybe we should go to sources that other states use,” Elrich said.
Elrich favors a reform known as “combined reporting” that ensures that companies don’t avoid taxes by shifting their income on paper to other states or entities. Elrich said the “allergy” to corporate tax reform is pointless.
“We’re leaving millions, if not billions, of dollars on the table,” he said.
Moore will propose his next budget in January, and it will cover state spending for a 12-month period starting July 1, 2025.
