Governor Hogan Explains his Budget

The Budget: A Change We’ve Been Waiting For

One of the changes that we have long talked about regarding our State Budget was the amount of spending that was built into formulas and mandated spending. When you look at the details of Governor Hogan’s Fiscal Year 2016 budget, the cuts that are being proposed were to the discretionary areas of that spending. The formulas were not touched for this budget.
Beyond spending cuts for next year, Gov. Larry Hogan is asking the General Assembly for an array of permanent, long-term budget reductions — for public schools, private colleges, libraries and economic development aid for farmers.
The sweeping proposal, which would reshape Maryland’s budgets for years to come, was presented to the General Assembly Monday. It comes after Hogan’s release last week of an austerity budget for the fiscal year that begins July 1.
THIS is the change that we’ve been looking for as Marylanders. Constitutionally, Maryland has one of the strongest Governorships due to the high level of discretionary budgetary authority invested in the Governor. The General Assembly can cut from the budget, but cannot add to it. Over the year’s though, the General Assembly has created mandated spending through formulas. The formulas have been rarely touched over the years, and it creates a situation where Democratic Governors and their cohorts in the General Assembly can force through budgetary increases and say that their hands are tied. It creates automatic increases in spending to generally help Democratic constituencies and interest groups, and ensures that spending for those constituencies will continue to increase regardless of Gubernatorial support. (Much in the same way that the indexing the gas tax to inflation creates automatic tax increases without additional legislative action).
Remember, that this formula spending was built into the budget. That’s why the original draft FY 2016 before Governor Hogan introduced it called for a 5% increase in state spending, outpacing the 3.5% projected increase in tax revenues. It’s one of the reasons that former Governor Martin O’Malley would say his “hands were tied” every time he tried to cut the budget and followed it up with a proposed tax hike.
Some of the changes that Governor Hogan are looking to implement include:
The organization that helps farmers get financing to continue working in agriculture, the Maryland Agricultural and Resource-based Industry Development Corporation, for example, would take a one-year hit of $1.1 million this year under Hogan’s budget. Under his second step, that cut would last until 2024.
Private colleges such as Loyola and Johns Hopkins University are, by law, supposed to get $16 per student for every $100 per student the state sends to the public university system. Under Hogan’s long-term plan, those schools would share from a pool that would grow by a smaller amount each year.
These are just examples of the formula changes that are being proposed by the Hogan Administration.
Governor Hogan ran on a campaign last year to Change Maryland. And so far he and his Administration are proving that it’s not just a campaign slogan. In his first week in office, the Governor has eliminated the structural deficit, reduced agency spending, and started work to rollback the mandated spending that Democrats have used an excuse to continue to increase spending and increase taxes. All of this designed to permanently control spending and pave the way for tax increases to get Maryland back to work and prove that Maryland is indeed open for business.
Governor Hogan is doing exactly what he said he would do. This is the change that the people of Maryland have voted for. And it’s a great start to a new era in Annapolis.

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