A Field Guide to Maryland Surpluses and Deficits

Following Comptroller Franchot's recent announcement of the state's fiscal year close-out, there are lots of numbers flying around purporting to be a surplus or a deficit. There's a billion-dollar surplus, a billion-dollar deficit, and several numbers in between.

Which one is right?

Well ... all of them.

Each of these figures can be called a “surplus” or “shortfall.” One of the reasons discussions about the state’s budget become confusing and frustrating is that different people use different measures of the “surplus” or “shortfall” or “deficit,” often depending on the message they want to convey.

$990 million – this is the amount of the general fund balance on June 30, 2011, the end of the previous fiscal year. It is like the state’s checking account balance on that day. It reflects a point in time in the past, and so it is a certain number.

$314 million – this is the amount the 2011 general fund revenues exceeded the estimate in the final budget. The actual collections were $13,537 million. The latest official estimate was $13,223 million. It also measures past revenues and is not subject to change.

$344 million – this is the total amount by which the state’s general fund balance exceeded the amount previously budgeted on June 30, 2011. In addition to the $314 million revenue surplus, it includes $24 million in final expenditures below the budgeted amounts and $6 million in additional transfers from other funds to the general fund.

$400 million – this is the amount that would be the general fund balance on June 30, 2012 if nothing else changes. This gives us a picture of the state’s projected fiscal path. In particular, it shows that the state plans to spend down part of its account balance during the current year. However, this figure will change several times over the upcoming months as we get new revenue estimates and new information on expenditures.

$1 billion - this is the estimated shortfall for the 2013 fiscal year, the budget the governor must present to the legislature next January. This number will also change over the upcoming months. Since it’s based on many assumptions about future finances and policy decisions you may see this shortfall estimated as anywhere from $700 million to $1.1 billion.

Maryland’s revenue surplus is good news. See our complete report here. But, the surplus does not come close to solving Maryland’s long-run revenue shortfall. It is only a thin cushion.

Looking into the future, revenues are not adequate to meet the current  service levels for education, health care, public safety and the needs of a still-fragile state economy. Many risks are in play, from the state of the national economy to the ill effects of federal budget actions.

 Maryland needs to be ready to respond with a balanced approach that includes sensible revenue measures.