Gov. Martin O’Malley’s $37.3 billion spending plan for fiscal 2014 doesn’t raise taxes and offers additional road repair funding for the state’s 157 municipalities, but lawmakers still might consider raising new revenue for transportation this session.
O’Malley said Oct. 16 that he and Senate President Thomas V. Mike Miller Jr. (D-Dist. 27) of Chesapeake Beach were discussing options for funding transportation projects, which many see as a top priority for lawmakers this session.
“I think he has some ideas. I offered my ideas last term,” O’Malley said, alluding to proposals to phase in a 6 percent sales tax on gasoline and to raise the overall sales tax by one penny. Neither option moved forward in 2012.
A state Blue Ribbon Commission on Transportation Funding recommended in late 2011 that the state raise an additional $870 million per year to put toward transportation projects.
Under O’Malley’s proposed budget, Maryland’s cities and towns will benefit from an increase in Highway User Revenues –– funds allocated for local road repair projects –– to $23 million, said Judith “J.” Davis, president of the Maryland Municipal League. The league made restoration of the money a top priority this year.
“It is a much more positive picture for all the municipalities that are just now getting into their budget process,” Davis said. “We have more money that we can count on to redo that road that we’ve been holding back on or make sure the sidewalks are safe.”
Highway User Revenues have been cut drastically since 2008 to help balance the state’s budget.
“Unfortunately, the roads don’t understand that, and they keep getting worse and worse,” said Timothy McNamara, Blandensburg’s director of public works. Many towns have had to “dig deep” to find money to cover repairs, so the new funding was a tremendous help,” he said.
Davis, who is mayor of Greenbelt, also praised the $67.5 million O’Malley proposed for local police aid, a 48 percent increase from fiscal 2013.
O’Malley told reporters in Annapolis the $3.7 billion set aside for capital projects would support more than 43,000 jobs.
The fiscal 2014 proposal represents a 4 percent increase from the fiscal 2013 budget and, as submitted, contains no changes to the state’s tax rates.
O’Malley’s spending plan includes $6 billion in K-12 education aid, an increase of $206 million from fiscal 2013, and reduces the state’s structural deficit –– which stood at $2 billion three years ago –– to $166 million.
The remaining gap was left in place because “I don’t know what’s going to happen on Capitol Hill,” said Secretary of Budget and Management T. Eloise Foster.
This past month’s last-minute agreement in Congress to avoid the so-called “fiscal cliff” left the lingering threat of federal spending constrictions known as sequestration, which could take effect in February.
O’Malley’s proposal increases the balance of the state’s Rainy Day Fund to 6 percent of revenues, or about $921 million, and projects a fund balance of $236 million, which would bring the state’s cash reserve to about $1.16 billion.
Those funds would safeguard the state against “the harikiri Congress down the street,” said O’Malley, comparing the fiscal brinkmanship in Washington to the ritual suicide practiced by Japanese samurai.
Republican leadership took issues with the governor’s claims about a “jobs budget,” arguing that the proposed capital spending plan supported roughly the same number of jobs as last year’s proposal.
The governor wasn’t creating new jobs but shifting jobs from one project to another, said Sen. Minority Leader E.J. Pipkin (R-Dist. 36) of Elkton. “There’s really nothing in this budget that does anything for private-sector job growth,” he said.
Pipkin also criticized O’Malley’s plan to attract Hollywood productions to the state by raising the film tax credit to $25 million –– an increase of $17.5 million from fiscal 2013 –– while the governor has supported efforts to repeal the state’s tax credit for mined coal.
The state’s ability to increase the Rainy Day fund was likely a sign that Marylanders were being taxed too much to begin with, Pipkin said.
The conservative group Change Maryland also took aim at the spending plan, warning the transportation funding issue would resurface soon.
“Nowhere in this budget document is any mention made to helping Maryland’s blue-collar workers or other working people,” Chairman Larry Hogan said in a statement Wednesday. “However, we’re all told to wait for some undefined sales and gas tax increase later on that will hit poor people the hardest.”
Under O’Malley’s proposal, Maryland’s state employees are slated to receive a 3 percent cost-of-living adjustment and will face no service reduction, or furlough, days.
The proposed capital budget also includes $210 million during five years for the construction of a new regional medical center in Prince George’s County.
“We’re delighted that (the governor) came through with this promised funding,” Del. Doyle L. Niemann (D-Dist. 47) of Mount Rainier said.
O’Malley also proposed a change to the formula for determining the counties’ share of education aid, phasing in a new calculation of a jurisdiction’s net taxable income during five years. The change is expected to result in increased education aid to Prince George’s and some other counties.
In all, O’Malley’s budget showed how well the state has managed, given the recent economic downturn, said House Speaker Michael E. Busch (D-Dist. 30) of Annapolis.
Busch said last week that he was pleased after being briefed on the proposal. “He wasn’t asking us to raise any revenues, and we were fully funding all of our programs,” he said.
Miller told reporters Jan. 16 that the governor’s proposal was a “lean budget” geared toward keeping state spending down while using capital projects to stimulate job growth.
Overall, O’Malley’s spending plan was notable for its lack of surprises, said Neil Bergsman, director of the nonprofit Maryland Budget & Tax Policy Institute.
Increasing the state’s reserves was certainly sensible, given the uncertainty of future federal funding, Bergsman said.
“If you just read the budget, you would have no idea there was any problem financing the state’s transportation needs or whether the governor proposed to do anything about it,” he said.
Tuition to rise 3 percent at public universities, colleges
For the fourth year in a row, Gov. Martin O’Malley’s fiscal 2014 budget raises tuition for in-state undergraduate students at Maryland’s public universities and community colleges by 3 percent, an amount that officials say is ideal for keeping tuition affordable while providing services for students.
“We could not be more pleased with the budget,” said Chancellor William E. Kirwin of the University System of Maryland. “The governor has made a huge commitment to higher education.”
The budget allocates $5.83 billion to higher education, including $4.95 billion to the University System of Maryland, up 3 percent from 2013.
That money, Kirwin said, includes $35 million to increase the capacity of science, technology, engineering and math programs to commercialize research being done in the universities,
“With all of this generous support, we’ll be able to keep that tuition increase at about 3 percent,” Kirwin said, likening the jump to a cost-of-living adjustment.
At a news conference Wednesday announcing his budget plan, O’Malley touted tuition caps and freezes over the past five years, saying Maryland public universities have had the smallest tuition increase in the nation during that time.
‘Jobs budget’ promotes school construction
As part of his so-called “jobs budget,” Gov. Martin O’Malley is proposing $335.7 million in capital funding for public school projects.
That money, he said, will support an estimated 8,200 jobs in construction and related industries.
Some of the money is dedicated to certain statewide programs; $25 million will go toward improving school security, and $25 million will be for air conditioning in public schools.
The big winner in the school construction budget is Baltimore city with $26.3 million proposed, including $5 million for the Maryland School for the Blind and $4 million for Baltimore City College. Baltimore County would get $23.8 million, including $7.5 million for a new Lutherville elementary school.
Prince George’s County is being allocated $22.4 million, and Montgomery County would receive $21.5 million.
O’Malley is also allocating $354.7 million for building projects at higher-education institutions, including $280 million for public four-year schools and $52 million for community colleges. That is up significantly from last year’s budget proposal, which allocated $245 million for public four-year institutions and $44 million for community colleges.
Staff Writer Holly Nunn contributed to this article.