Governor Releases $172 Million Supplemental Budget as Legislative Action Heats Up; Additional $32 Million for Cold Weather Effects

After a freezing winter, warmer weather has finally arrived and budget action heats up this week in Annapolis. On Tuesday, the Governor released a $172.2 million Supplemental Budget, with $162.7 million in net new spending, including $55 million for debt service, $32.4 million to deal with the effects of the extreme winter, and $32 million for the Maryland Children’s Health Program (MCHP). More than three-quarters of the Supplemental Budget is funded by state sources, with special funds, such as added money to the Annuity Bond Fund for debt service and $32.5 million in transferred money from the Strategic Energy Investment Fund, making up the majority of new funds. The Governor’s Supplemental Budget incorporates last month’s lowered state revenue projections from the Board of Revenue Estimates (BRE), adds new fund transfers, and relies on additional revenue sources, with $19.8 million in new General Fund revenue, including $10 million from Medicaid False Claims Collections, and $39 million in new federal funds, including $21.2 million in Medicaid funds and $13.8 million in planning grants for the state’s health exchange system.

Source: Department of Budget and Management;  Note: See “Summary: Supplemental Appropriations,” page 22.

Like a family saving for a new home or college, the Supplemental Budget does not spend all of this new money and sets a portion aside to increase the state’s cash balance. In addition, $9.7 million of new General Fund revenue goes to K-12 education aid to offset a shortfall in casino proceeds allocated to the Education Trust Fund. According to legislative analysts, net new spending items, accounting for cost savings and other changes, total $162.7 million. 

The $55 million in new money in the Annuity Bond Fund to pay for interest on the state’s debt, or debt service, is essentially a fund swap.  The legislature cut $55 million in related General Funds and now they are being replaced with these additional special funds, due to the anticipated increased premiums of bond sales.  Additional current-year funding to deal with the winter’s extreme cold includes $20.1 million for low-income energy assistance, $10 million to repair potholes, and $2.3 million for utilities at Jessup Correctional Institution (JCI).  MCHP receives $32 million for the current fiscal 2014 budget for higher enrollment and to provide a 5.8 percent provider rate increase in calendar 2014.

Source: Department of Legislative Services Note: MDCEP staff sorted the new spending items and changes on page 1 into above categories.

Additional supplemental spending includes $15.8 million for information technology improvements for the Maryland Health Benefit Exchange (MHBE); and $12.4 million for energy efficiency and renewable energy, with $11.1 million for various clean and renewable energy projects and an additional $1.3 million to install electric vehicle charging stations. In addition to the added money for utilities at JCI, $5 million in new current-year spending goes to overtime at Baltimore City Detention Center.  Morgan State University gets an additional $4 million; and Alternatives to Para-transit Services receives $2.7 million.

Other notable new spending items include $1.5 million for cybersecurity vulnerability assessments; $1.2 million in capital funds for homeownership programs (specifically energy efficiency and weatherization projects); $1 million for the Eastern Family Resource Center, which  provides comprehensive care to homeless residents of Baltimore County; $630,000 for improvements at racetrack facilities; $550,000 for community college scholarships; $200,000 for a homeless youth census demonstration project; $200,000 for the Parents and Children Together program, which promotes the development of young children with special needs and their families; $125,000 for Best Buddies, a program that promotes opportunities for Marylanders with intellectual or developmental disabilities; and $146,000 for job training at the Regional Skills Training Center for Excellence.

Source: Department of Legislative Services 

The House and Senate have both passed their own versions of the budget, based on the Governor’s original proposal. A Conference Committee is now hammering out the details of the final package, no doubt incorporating many elements of the supplemental budget, but we do not yet know what the final budget package will look like. Check back here for more information on any additional supplemental budgets, upcoming legislative budget actions, and the impact on valuable and proven services and programs.