Happy (Fiscal) New Year!

July 1 starts a new fiscal year for Maryland state government. And Maryland’s finances are in pretty fair shape. Not perfect, but pretty fair.

The state begins the new fiscal year with about $320 million in its general fund (Maryland's checking account). There’s also over $700 million in the Rainy Day Fund (our savings account).

The state’s budget is balanced for the year. The estimated revenues plus the beginning fund balance more than cover the budgeted expenditures. 

These expenditures pay for local schools, college education, healthcare, the men and women who keep our communities safe. They help our communities now and strengthen Maryland’s economy for the future. To see some of the ways the state budget helps us and our neighbors, check out this blog entry at Moving Maryland Forward Network.

Although the legislature deadlocked at the end of the regular session, they returned for a special session and enacted a responsible balanced budget 45 days before the end of the fiscal year. There are many states that routinely start the fiscal year without an enacted budget in place. And then there’s Congress….

All three national credit rating agencies continue to give Maryland their top “Triple-A” ratings. These evaluations reflect the state’s economy and the characteristics of the bonds, along with Maryland’s sound financial management practices.

There are certainly challenges ahead. Next year, Maryland will face another revenue shortfall, along with a need to provide funding for transportation infrastructure. We have ongoing unmet needs in education, healthcare, services for children, job training, and other areas. So there’s more work to do.

We can meet these challenges. Governor O’Malley and the legislature have shown they can reach a responsible compromise that keeps the state’s finances on track and protects our investments in education, infrastructure and the rest. 

I promise to resume my usual gloom and doom budget talk soon enough. But for now: it’s New Years. It’s a time to recognize some of the really good things about our state budget. It's time to be hopeful about the future. Happy New Year, Maryland!

Affordable Care Act Constitutional

As you've no doubt seen, the U.S. Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act (ACA), including the insurance mandate "tax". This is good news for the millions of Americans without health insurance (or who previously lacked insurance, like the 52,000 Marylanders age 26 and under who now have health insurance through their parents because of the ACA), and the millions more who have insurance but pay the social costs of supporting those in need of care who can't afford it.

Maryland has consistently been in front of other states in terms of implementing the ACA, and this is likely to continue. Barring the Republicans gaining a supermajority in Congress and repealing the act entirely, Maryland is well positioned to take full advantage of the changes now ahead. 

Nonprofit Quarterly has a good roundup of what to expect now that the court has ruled:

• "Expect more opposition advocacy." - Whether this ruling will be a boon for either party in November remains to be seem, but it's definitely an issue that isn't going to go away.
• "Expect resistance to health exchanges in some states" - Not in Maryland, however.  We continue to develop our health exchange as fast as possible.
• "Expect more funding wars."  - This is the outcome that has the most potential for danger to Maryland. If Congress cuts funding, Maryland will have to figure out how to continue making progress with less.
• "Expect attempts to better assist small businesses and nonprofits."
• "Expect increased scrutiny of nonprofit hospitals."

New Certified Public Manager program

Over lunch I attended an open house for a new partnership between Maryland Nonprofits and the Schaefer Center for Public Policy at the University of Baltimore, the Maryland Certified Public Manager(CPM) program.

Starting in October, the CPM program is a leadership development program for public managers and supervisors. The program will offer "participants the opportunity to learn and practice the critical leadership skills and competencies necessary to effectively meet the complex demands and challenges in the 21st century public management environment."

The program is designed for people who are preparing to move into supervisory or management positions, those who want to update their skills, as well as managers and supervisors who have professional or technical training in another field but do not have formal management training. 

If you or your organization/agency are interested, applications are being accepted now through 5pm, August 2nd. The next informational session about the program will be held on July 26th from 9-11am at our offices at 1500 Union Ave. in Baltimore.

Metropolitan Employment

In other news, the Bureau of Labor Statistics (BLS) released May data on metro area labor markets today.  The trends look better for Maryland than they have in the last few months, as all four metros experienced lower unemployment rates compared to May 2011 (BLS does not provide seasonally adjusted figures at the metro level, so comparing April to May is meaningless). Even Salisbury, which has seen higher rates on an annual basis until last month when it was stable, fell to 8.5 percent unemployment, compared to 8.9 percent 12 months prior.

The Week Ahead

Last week we blogged about Maryland bucking the trend of public disinvestment, and the inability of the legislature to compromise on expanded gambling (so far). 

Monday, June 25th

• State Commission on Criminal Sentencing Policy holds a meeting to review and evaluate Maryland's sentencing guidelines and policies. 5:30pm in Training Rooms 1 & 2 of the Judiciary Education and Conference Center, 2009D Commerce Park Drive, Annapolis. 
• Joint Committee on Exchange Financing of the Maryland Health Care Reform Coordinating Council will hold its first meeting. The exchanges are a key part of the Affordable Care Act (ACA), so no doubt the impending Supreme Court decision (see Thursday, below), will be on everyone's minds. 1-3pm in the Joint Hearing Room, Department of Legislative Services, Annapolis.

Tuesday, June 26th

• The Task Force to Study the Court Decision Regarding Pit Bulls will hold a work session. 10am in room 2 East, Senate Building, Annapolis. 

Wednesday, June 27th

• The Workgroup on Access to Habilitative Services Benefits will hold its first meeting. 9am in the Hearing Room on the 24th Floor of St. Paul Plaza, 200 St. Paul Place, Baltimore.

Thursday, June 28th

• Maryland's Medicaid Advisory Committee meets. 1-3pm at the offices of the Department of Health and Mental Hygiene, Lobby Level Conference Room L-3, 201 W. Preston Street, Baltimore.
• Maryland's Venture Fund Authority holds a board meeting. 10am to noon at the offices of the Department of Business and Economic Development in a conference room on the 17th floor of the World Trade Center, 401 E. Pratt Street, Baltimore. 
• Maryland Nonprofits is offering Program Design: From A to Z. For more information or to register for this training go to their events page.
• The U.S. Supreme Court will release its ruling on the constitutionality of the Affordable Care Act. If they rule against the ACA they may do so in whole or in part, and the consequences for Marylanders and others with inadequate access to health care may be significant. Look for a related post on this blog later on Thursday.

Saturday, June 30th

• The Fair Development Coalition is cosponsoring an event to celebrate the passage of HB 457, which mandates that .5% of federal transportation funding go toward job training programs.  U.S. Congressman Elijah Cummings will speak, and a number of other state and local political figures have been invited. Inquires about the event can be directed to Maureen Daly at 443-286-4731 or maureen.daly4@gmail.com, or David Casey at 443-857-0831 or bridgemaryland@aol.com. St. Bernardine Church Hall, 614 Mt. Holly St at Edmondson Ave. in West Baltimore.

Gambling workgroup falters

The Workgroup to Consider Gaming Expansion failed to reach a consensus yesterday, as the likelihood of a second special session retreated.  The sticking point appears to be whether to keep the 67 percent tax rate on casinos or reduce it. Members representing the House of Delegates were willing to support a sixth casino, if it delayed opening until 2016 and if the tax rate remained the same.  While supporters of a casino at National Harbor were willing to delay its opening, they argued that it only made business sense if the tax rate were lowered.

However, there was significant agreement on other issues, including:

• Allowing table games such as blackjack and poker.  This could net the state an additional $51 million, and create 1,900 jobs.
• Transferring ownership of slots machines from the state to the operators. This would save Maryland about $80 million annually.
  
• Establishing an independent gambling commission to oversee casino operations, separate from the lottery commission.
• Ending restrictions on casinos' hours of operation.

The consensus suggests some or all of these issues could be addressed in the 2013 regular legislative session. The 2013 legislature could act on the recommendations regarding ownership of the machines, the organization of the regulatory commission, and hours of operation. Of course, those are not the big issues. The legislature could also act to adjust the tax rate on gaming proceeds, which is one of the big issues.

However, any expansion of gaming - either to a new location or for table games, requires approval by the voters in a referendum. If there is indeed no special session prior to the November election, those issues will need to wait for the next statewide general election in November 2014.

Maryland bucking the trend

Nationally, many states are pursuing a strategy of public disinvestment in order for conservative politicians to demonstrate their opposition to taxes. Some states, like Michigan, New Jersey, Indiana, and Tennessee, are enacting rash and irresponsible tax cuts.    Other states are attempting to go much farther

Some state legislators are proposing to eliminate whole taxes, cutting state revenues by 30 or 40 or 50 percent. Georgia, Kansas and Oklahoma have considered proposals to abolish their state income taxes. North Dakota voters defeated a proposal to eliminate their property taxes only after voters rejected it in referendum.

Governing Magazine’s Penelope Lemov recently interviewed the (progressive) Center on Budget and Policy Priorities’ Nick Johnson and the (conservative) Tax Foundation’s Joe Henchman about this trend. (Disclosure: the Center on Budget and Policy priorities is a major national coalition partner with the Maryland Budget and Tax Policy Institute).

Johnson and Henchman both pointed out that the cuts needed to offset such large revenue reductions can be very harmful to a state.

Henchman: “Depending on what you cut, you will have an economic effect. If you cut education, that might make your state less competitive. There are trade-offs.”

Johnson: “A state could end up with much higher sales taxes and excise taxes, much higher local taxes and larger class sizes, fewer teachers, libraries and cops on the street, and less availability of health care. It's magical economic thinking -- this idea that there's a free lunch to be had.”

So, there’s broad agreement that our taxes do pay for something valuable.

In contrast to the national tax-cut fever, Maryland’s legislature used a balanced approach to balancing the budget this year, including fair and moderate tax increases. It preserved funding for the functions important to our state’s economy and quality of life. Our elected representatives did the obvious and responsible thing.  Yet in doing so, they were bucking the national trend.

 At the same time, we have further evidence to disprove one of the common bogeyman of the anti-tax brigade.  Jeffrey Thompson at UMASS’ Political Economy Research Institute has compiled a very thorough, balanced and readable survey of the research on the economic effects of state taxes on high income taxpayers. The result? “Modest tax increases on high-income households are unlikely to make substantial changes in their work effort or entrepreneurship or make them more likely to leave the state.” There may be more tax-sheltering behavior, particularly among the top 1/10 of 1 percent.

Professor Thompson concludes “The benefits of sustaining appropriate levels of funding on K-12 and public higher education, public safety, and transportation should be weighed against these consequences – as opposed to unsubstantiated fears that the rich will flee a state en masse or shut down their businesses.”

In Maryland, our leaders made these responsible choices. We need to maintain our support for education and our other shared public assets so we have a strong future with growing prosperity that’s broadly shared.

The Week Ahead

Last week we blogged about the Department of Legislative Services' report on gambling expansion and the rising state unemployment rate.

Monday, June 18th

• Commission to Study Campaign Finance Law holds a commission meeting. 4pm in room 130 of the House Office Building, Annapolis.

Tuesday, June 19th

• Task Force to Study the Court Decision Regarding Pit Bulls holds a briefing with invited speakers. Other interested parties may submit written testimony. 10am in room 2 East of the Senate Office Building, Annapolis.
• Workgroup on Lead Liability Protection for Rental Property holds its first meeting.  10am in room 230 of the House Office Building, Annapolis.
• The Essential Health Care Benefits Advisory Committee of the Maryland Health Care Reform Coordinating Council holds its first meeting. 10am to 11:30am at the Maryland Health Care Commission, 4160 Patterson Avenue, Room 100 Baltimore.
• Maryland Nonprofits is holding a training on Cultural Competency for nonprofit leaders, centered around an assessment tool for organizations. 9:30-11:30am in Silver Spring.  For more information and to register, go the Maryland Nonprofits' events page.

Wednesday, June 20th

• Board of Public Works meets. 10am in the Governor's Reception Room on the second floor of the State House. The pre-meeting will be held at 9:45am in room 217.  Some of you may have read about Comptroller Franchot's displeasure with the pre-meeting routine.
• Workgroup to Consider Gaming Expansion will hear a presentation from the Department of Legislative Services on gaming commissions in other states, followed by a work session. 1pm in room 101 of the House Office Building, Annapolis.
• Our friends a the Maryland Consumer Rights Coalition are cosponsoring - with the Montgomery County’s Advisory Committee on Consumer Protection - a public forum on home improvement issues, with topics covering everything from avoiding scams to state licensing requirements. The forum will be held on Wednesday, June 20 from 7 to 9 p.m., at the Council Office Building, 100 Maryland Ave., First Floor Auditorium, Rockville. 

Thursday, June 21th

• Maryland Health Care Commission meets. 1pm in room 100 at their offices at 4160 Patterson Avenue Baltimore.