Choices and Challenges: Maryland's Budget Outlook & Governor's Upcoming FY 2015 Budget - Part III

By David McNear

Previously, we have provided a general overview of the state budget process as well as a more detailed discussion of the sources of the deficiencies that state lawmakers must address in the current session. We will conclude with an overview of Maryland’s capital budget as well as provide more detail on the operating budget

Capital Budget Overview

 Maryland's Capital Budget funds the state's Capital Improvement Plan.  In FY 2014, GO Bonds made up $1.1 billion, or 71% of the total $1.5 billion Capital Budget.  Capital projects for Agriculture, Environment and Natural Resources accounted for $486 million, or 31%, with Education/School Construction at $348 million, or 22%, and Higher Education projects at $352 million, or 23%. 

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The Capital Debt Affordability Committee recommended $1.16 billion in GO Bonds for the upcoming Capital Budget.  Due to prior authorizations, including the public school construction set-aside, only $320.4 million is projected as "unspoken for" by DLS, or about 28% of recommended GO Bonds. 

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Operating Budget Detail

General Fund Revenue is expected to grow from $14.6 billion in fiscal 2013, to $15.2 million in FY 2014 and just over $16 billion in FY 2015.

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Maryland's expanded gaming program has increased receipts for the Education Trust Fund (ETF) and provided General Fund budget relief. The BRE projects $344 million in gaming revenue for the ETF in FY 2014 and $417 million in FY 2015.

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General Fund spending growth in Local Aid is relatively flat, due to changes in local portion of teacher retirement costs and low inflationary data used in K-12 funding formulas.  Entitlement spending is expected to increase, mostly due to increased Medicaid spending. 

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The $6.6 billion in FY 2014 General Fund Spending on State Agencies in FY 2014 is projected to increase to $6.9 billion in FY 2015 budget.  Fiscal 2014 state agency spending includes DLS-projected deficiencies. 

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There is $6.3 billion in General Fund State Aid to Local Governments for both the FY 2014 and the FY 2015 budgets, with 91% going to Education and Libraries. 

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In addition, there is $2.9 billion in General Fund FY 2014 & FY 2015 Entitlement Spending, with $2.5 billion for Medicaid.  Again, Fiscal 2014 entitlement spending includes DLS-projected deficiencies. 

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In the previous three posts, we’ve provided a lot of detail on the context that state lawmakers face as they work to craft Maryland’s budget. Check back here for more on specific issues that affect all Marylanders as we move through the legislative session. Later this week, we will provide an instant analysis of Governor O’Malley’s budget, which he must submit by Wednesday, January 15.