md governor's budget proposal, fy2012

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    1

    Governor Martin OMalley

    January 21, 2011

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    Maint a in ing Fisc a l Responsib i l i t y

    Maryland remains 1 of only 8 states with a Triple A bondrating certified by all three rating agencies.

    During the first term of the OMalley-Brown Administration,the State adopted $5.6 billion of spending reductions andabolished almost 4,200 positions.

    With the proposed FY12 budget, total spending reductionsrise to $6.6 billion and position abolishments exceed4,700.

    Despite fiscal pressures, Maryland has preserved itsRainy Day Fund.

    Marylands fiscal challenges are the result of the national

    recession which dramatically reduced anticipatedrevenues.

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    Resolved an Inher i t ed St ruc t ura l Def ic i tDur ing t he 2007 Spec ia l Session

    The inherited structural budget deficit approached

    $1.7 Billion Special Session Actions

    Reduced spending by $550 M in FY09

    Increased General Fund revenues by more than$800M in FY09

    Approved new recurring revenue source from VideoLottery Terminals (VLTs)

    Erased structural deficit by FY12

    Projected FY12 Cash Surplus of $290M

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    Resolved Inher i t ed Budget Chal lenge

    Dur ing 2007 Spec ia l Session

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    $310 $236 $280$550 $441

    $75

    $348

    $94

    $1,245

    $285$494

    $232

    $954$1,057

    $0

    $1,000

    $2,000

    $3,000

    $4,000

    $5,000

    $6,000

    $7,000

    Jan

    07

    Apr

    07

    July

    07

    BPW

    Nov

    07

    Apr

    08

    Jun

    08

    BPW

    Oct

    08

    BPW

    Mar

    09

    BPW

    Apr

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    July

    09

    BPW

    Aug

    09

    BPW

    Nov

    09

    BPW

    Apr

    10

    Jan

    11

    Budget Actions

    $in

    Millions

    Cumulative Reductions

    During O'Malley-Brown

    Administration

    A St eady Diet o f Cut s

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    Balanc ing Budget w i t hou t

    Rec overy Dol lars

    Temporary federal Recovery dollars fund $1.4B of

    Medicaid, public safety, and K-12 education expensesin FY11.

    No federal Recovery dollars are available to support

    ongoing expenses in FY12. Due to the OMalley-Brown Administrations judicious

    financial management, the State has preserved almost

    $700M of fund balance to ease the transition away fromRecovery dollars in FY12.

    The availability of fund balance and other transfers

    allows growth in General Fund spending in FY12 tooffset loss of federal recovery dollars.

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    Tough Choic es t o Move

    Mary land Forw ard

    Balance the budget entirely with cuts

    Close a $1.4B General Fund budget shortfall

    Cut General Fund spending by nearly $1B

    Reduce the structural deficit by $730M (37%)

    Make the State pension system moresustainable

    Erase almost half the unfunded retiree health

    liability

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    FY2012 Budget Reduc t ions$ in mi l l ions

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    Reduc ing t he Size of Governm ent :

    St at e Em ployees Share of Sac r i f ic e More than 4,200 State positions have been eliminated during

    the OMalley-Brown Administration.

    Over the last three years, employees have absorbed more than$580M of reductions to salaries and benefits

    Furloughs & Temporary Salary Reductions in FY09 FY11

    No COLAs or Step Increases in FY10 & FY11

    No Deferred Compensation Match

    Voluntary Separation Program

    Almost 1,400 applicants

    FY12 budget assumes about 1,000 applications accepted/positions abolished $40 million of recurring savings beginning in FY12

    There are fewer executive branch employees today than inFY07

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    53,364

    51,058

    48,000

    49,000

    50,000

    51,000

    52,000

    53,000

    54,000

    FY 2007 FY 2012 Allow.

    Ex ec ut ive Branc h Em ployees

    FY 2007 - FY2012 Com par ison

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    Ex ec ut ive Branch Pos i t ions Have Dec l inedUnder OMal ley-Brow n Adm in is t ra t ion

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    There are few er government em ployees per

    Mary land res ident t han s ince FY1974

    Executive Branch Employees per 1,000 residents

    1

    0.9

    11.8

    14.1

    14.3

    14.6

    14.7

    14.7

    14.7

    14.6 1

    4.2

    15.3

    14.6

    14.5

    14.9

    14.9

    15.0

    15.1

    15.4

    14.7

    14.0

    13

    .5

    13.

    7

    13

    .5

    1

    3.4

    13.2

    13.6

    13.8

    14.3

    13.8

    13.

    7 13.3

    13.2

    1

    3.5

    13.

    7

    13.

    7 13.1

    1

    3.4

    13.1

    13.1

    FY2012

    13.0

    FY1974

    12.3

    10

    11

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    2010

    2012

    employeesper1,0

    00residents

    Employees per 1,000 residents

    Lowest ratio of State employees to state residents since FY1974

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    St ream l in ing Governm ent

    Maryland House of Correction

    Four State Hospitals

    Carter Center, Rosewood, Upper Shore, RICA So. MD

    Welcome Centers (8)

    DBED Foreign Offices (3)

    New Actions

    Consolidations ($4M) Higher Education Commission with State

    Department of Education Consolidate Certain Programs with Department of

    Natural Resources Transportation Police Forces Consolidate Policing Most State Facilities with

    General Services Police Consolidate Highway Maintenance Facilities

    Voluntary Separation Program 1,000 position

    abolitions expected ($40M) Close Brandenburg Center ($2.7M)

    Discontinue High School Civics Assessment ($1.9M)

    Discontinue Tolbert Scholarships ($200,000)

    Prior Actions

    Consolidated State Print Shops ($500k)

    Centralized Classification Unit ($396k)

    Applied Stricter Standard for Payment ofEmergency Room Claims & Enhanced Audits ofOut-of-State Hospitals ($5.5 M)

    Eliminated DNR Helicopter Unit ($372k)

    Consolidated Correctional Pre-Release Facilities($4.7 M)

    Eliminated Grant for Wine Promotion &

    Destination Imagination Downsized MHEC ($0.7M)

    Eliminated 14 DJS management positions ($1M)

    Reduced OT at DPSCS ($4M)

    Improved Management of Accident Leave ($3M)

    Annapolis State Police Barrack

    OFarrell Center

    Animal Health Laboratories (3)

    Dismas House

    Upper Shore Planning Office

    Facility Closures During OMalley-Brown Administration

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    87% of Genera l Fund Dol lars Al loc at ed t o

    Educat ion , Hea l th , and Publ ic Safet y

    39%Elementary &

    SecondaryEducation

    13%Other

    27%Health

    10%Public

    Safety

    11%Higher

    Education

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    $0.008 B

    $1.017 B

    $0.000

    $0.200

    $0.400

    $0.600

    $0.800

    $1.000

    $1.200

    Everything Else K-12 Education

    $inBillion

    General Fund Spending Grow t h

    FY 2007 t o FY 2012

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    FY 12 Budget Plan Im proves St ruc t ura l

    Out look by 37% in FY 12

    -$1,979 -$2,001-$1,878 -$1,876

    -$1,177 -$1,105-$1,040

    -$1,114

    -2,500

    -2,000

    -1,500

    -1,000

    -500

    0

    FY 2012 FY 2013 FY 2014 FY 2015

    Projected Structural Gap Gap After Proposed FY 12 Actions

    $inMillions

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    How t he $1.4 B Budget Gap w as Closed

    Transfers, $285

    Spending

    Reductions, $949

    Federal Tax

    Changes, $97

    Previously

    Unbudgeted

    Revenues/Other,

    $143

    $0

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    $1,400

    $1,600

    $inMillions

    Budget Gap

    = $1,354

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    FY 2012 Budget Balanc ing Plan

    FY 2012 Projected Shortfall (millions) $-1,354

    SolutionsBudget Reductions General Funds 949Redirection of Existing Revenues 285 Fund Capital Eligible Costs w/Bonds Rather than Cash ($191M) Divert Revenues from Transportation Trust Fund and Replace with Bonds ($60M) Fund Balance Transfers and Diversions ($34M)

    Revenue Additions/Other 143 Federal Retiree Drug Subsidy FY 11 & FY 12 ($47M) Level Fund Payments to Businesses for Collecting Sales Tax ($18M) Tax Compliance No Renewal of Vehicle Registration Until Tax Liabilities

    Addressed ($20M)

    Assess Bad Driver ($5M) and Parole & Probation Supervision ($4M) Surcharges Recoveries ($10M), Interest Earnings ($11M), Other ($17M) Eliminate Preferential Treatment for Maryland Mined Coal/IWIF ($11M)

    Net Impact of Federal Tax Cut & Pay Freeze on Revenue 97

    Closing FY 2012 Fund Balance $120

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    Budget H igh l igh t s

    Maintains record operating funding of $5.7B for K-12 education.

    InvestMaryland to grow the states knowledge-based industries by

    stimulating up to $100M in venture capital funds, creating thousands of jobs.

    $3.1B capital budget State construction spending will support nearly15,000 construction jobs in FY12.

    $25M for Bay 2010 Fund; a 25% increase over FY11 funding.

    Second consecutive year of a modest 3% increase for in-state tuition atfour-year public colleges and universities after a four-year tuition freeze.

    USM tuition rates have declined from 6th highest in nation to an estimated 25th in FY 2012.

    $5M Making College Affordable Fund allocation to community colleges thathold tuition growth to 3% or less in FY12.

    Fund health care coverage for 916,000 low-income children and adults.

    Nearly 310,000 more people than were covered when Governor took office.

    No furloughs and a $750 bonus for State employees.

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    Education - $488.5M

    $250M for Public SchoolConstruction

    $151.3M for Public 4-YearCampuses

    $63M for 20 CommunityCollege projects

    Health & Environment - $493.1M

    $247.2M for Bay Restoration projects

    $162M for improvements to localwater systems and wastewatertreatment plants

    $41.7M for Land PreservationPrograms

    $38.2M for Health-Related Projects,including funding for hospitals andcommunity health facilities

    $1.4B for St at e Fac i l i t ies and Capi t a l Program s

    FY12 Capi t a l Budget

    = $3.1 B i l l ion

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    FY12 Capi t a l Budget$1.7B for Transport a t ion projec t s

    Transit Improvements - $639M

    $34.0M for the Red Line Transitwayengineering

    $30.0M for the Purple Line Transitwayengineering

    $12.4M for engineering the CorridorCities Transitway

    $47.4M for various MARCenhancements

    $36.1M for improvements at the SilverSpring Transit Center

    $10.3M for engineering the Takoma/Langley Park Transit Center

    $28.5M for bus replacements

    Roadway Improvements - $815.9M

    $14.3M for BRAC intersections aroundthe National Naval Medical Center

    $25.3M for BRAC intersections near FortMeade

    $10.6M for the interchange at US 40 andMD 715 around Aberdeen ProvingGrounds

    $11.1M for I-695 at Charles Street

    $8.3M to replace the I-695 bridge overMD 26

    $16.4M for I-70 (Phase 2D)

    $6.4M to upgrade I-81/ I-70 interchange

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    A Foc us on J obs & t he

    New Ec onom y $3.5B included across operating/capital budget focused on jobs

    and job creation.

    InvestMaryland to grow the states knowledge-based industries bystimulating up to $100M in venture capital funds, creatingthousands of jobs.

    $15M for the Maryland Economic Development Assistance Fund to

    help stimulate business growth and economic development a25% increase.

    $12.4M for stem cell research, bringing five-year total under theOMalley-Brown Administration to $76.2M.

    $10M in Sustainable Communities Tax Credits to promote urbanredevelopment and create jobs.

    $8M for tax credits to spur investment in biotechnology companies.

    $3.8M for the Maryland Biotechnology Center.

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    A Foc us on Sk i l ls and Educ at ion

    Second year of record operating funding forMarylands top ranked Public Schools - $5.7B;

    bringing five-year total to $27.4B

    $4.9B direct aid to local school systems for FY12 including$128.4M for GCEI 3rd consecutive year of full funding

    $88M from four-year $250M Race to Top Grant to reformschools and close achievement gap

    $250M for School Construction, bringing five-year

    total to more than $1.5B Five consecutive years meeting or exceeding Kopp Commission

    recommendations

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    Preserv ing Rec ord K -12 Educ at ion Funding

    K-12 Operating Education Aid

    $3.1

    $5.7

    $2.0

    $3.0

    $4.0

    $5.0

    $6.0

    2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

    Billions

    $4.5

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    FY 2007

    $4.5 Billion

    FY 2012

    $5.7 Billion

    3

    3.5

    4

    4.5

    5

    5.5

    6

    $

    in

    Billions

    Preserv ing Our Rec ord Level Invest m ent in

    Mary land s Top Rank ed Publ ic Sc hools

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    $246

    $117 $128

    $252

    $323

    $402

    $340

    $267 $264$250

    0

    50

    100

    150

    200

    250

    300

    350

    400

    450

    FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11Proposed

    FY12

    $in

    Millions

    $250M Kopp

    Commission

    RecommendedThreshold

    OMal ley-Brow n 5-Year Tot al fo r Publ i c

    Sc hool Const ruc t ion Ex c eeds $1.5 B i l l ion

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    A Foc us on Higher Educ at ion

    $5.3B for public higher education

    $9M to keep tuition growth at 3% at USM and Morgan State

    University, only the second increase in six years.

    Enrollment at State colleges and universities estimated at 130,255 inFY12 13% increase since FY07.

    $263.1M for the local community colleges Enrollment at local community colleges estimated at 109,237 in FY12

    26% increase since FY07.

    $94.2M for Baltimore City Community College

    $5M to promote tuition affordability at the community colleges.

    $1M to establish Complete College Maryland, a competitive

    grant program to support best practices that increase degreecompletion.

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    Mak ing Col lege Af fordable for Mary landers

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    A St ronger Healt h ier Fut ure

    $7B to provide comprehensive health care coverage to

    more than 900,000 low-income, disabled, and chronicallyill children and adults.

    $17M to expand placements for people withdevelopmental disabilities.

    $8M for to raise payment rates for providers of services

    to developmentally disabled.

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    Ex panding Ac c ess t o Healt h Care by More

    t han 300 ,000 Mary landers Over Five Years

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    Medic aid Spending Has More t han Doubled

    Sinc e FY 2003

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    Sm art , Green , and Grow ing

    $25M for the Chesapeake Bay 2010 Trust Fund, an increase of25% over FY 2011.

    Maintain full funding for Program Open Space (POS).

    $16.2M for the cover crop program, which experienced recordlevels of participation in FY11.

    $7M from Strategic Energy Investment Funds for cleanrenewable energy grants and $1M to support Climate Changeprograms

    $6.1M for weatherization grants to improve the energyperformance of nearly 4,300 low income homes.

    $4.7M for energy efficiency programs, primarily to assist lowand moderate income Maryland residents.

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    A Safer , More Sec ure Maryland

    Total public safety budget of nearly $2.18B.

    $108M for Violence Prevention Initiatives targeting more than 2,000 of

    the States most violent offenders.

    Funding for a trooper class of 80 new recruits.

    $45.4M in police aid to local governments and municipalities.

    $20.3M in local law enforcement grants to target domestic violence,substance abuse, and gun trafficking.

    $10M for public safety wireless communication system

    $1.7M for continued implementation of the Computer Aided Dispatchand Records Management System to assist law enforcement agenciesand emergency responders with real-time information. Brings totalinvestment to $11.6M.

    $562,000 for the Offender Case Management System, bringing the total

    allocated to $14.8M. System tracks inmates from initial bookingthrough community release.

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    Tough Dec is ions t o Ba lanc e

    t he Budget$949 Million of General Fund Reductions

    Medicaid Payments to Hospitals ($264M)

    Federal Fund Maximization ($139M) Fund K-12 Costs w/FY 11 savings from Education Jobs Grant

    Medicaid Revenue Maximization Contract Retirement Reform Savings ($104M)

    Level Fund K-12 Education Aid ($94M)

    Public Higher Education Costs ($55M)

    Other Local Aid Reductions ($52M)

    Voluntary Separation Program ($40M)

    Employee/Retiree Rx Costs ($28M)