Maryland’s Budget The Smell of Gunsmoke
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Maryland’s Budget The Smell of Gunsmoke Neil Bergsman Maryland Budget and Tax Policy Institute April 18, 2011
description
Maryland’s Budget The Smell of Gunsmoke. Neil Bergsman Maryland Budget and Tax Policy Institute April 18, 2011. Economic Context. Good Corporation profits at record levels. Bad Economic growth has resumed, but not enough to fuel a broad, sustainable recovery. Ugly Jobs are not coming back. - PowerPoint PPT Presentation
Transcript of Maryland’s Budget The Smell of Gunsmoke
Maryland’s BudgetThe Smell of Gunsmoke
Neil BergsmanMaryland Budget and Tax Policy Institute
April 18, 2011
Economic Context
GoodCorporation profits at record levels
'06Q1 '06Q2 '06Q3 '06Q4 07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q40.7
0.9
1.1
1.3
1.5
1.7
1.9
US Corporate Profits
$ Tr
illio
ns
BadEconomic growth has resumed, but not enough to fuel
a broad, sustainable recovery
2007q1
2007q2
2007q3
2007q4
2008q1
2008q2
2008q3
2008q4
2009q1
2009q2
2009q3
2009q4
2010q1
2010q2
2010q3
2010q4
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
US Gross Domestic Product (GDP)
UglyJobs are not coming back
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42-200
-150
-100
-50
0
50
100
150
'81
'90'01
'08
Maryland jobs - change from pre-recession peak
Months after peak
Md
Empl
oym
ent -
thou
sand
s
Threats to the economy
•Federal spending cuts•State and local spending cuts•Not just Maryland
•Middle East•Japan
BUDGET OUTCOMESThe Big Picture
Good
• Budget is balanced through June 30, 2012• General fund balance $50 million• Rainy day fund $681 million
Bad
• The budget incorporates over $1 billion in cuts from current-service levels– Teacher and employee benefits– School systems– Healthcare providers– Local governments
Ugly
• The budget leaves a billion-dollar long term problem for upcoming years
On going base revenues; $13,841
Hospital Assessment; $254
Alcohol tax; $85
1-time savings; $170
Balances & transfers; $824
FY 12 General Funds$ millions
A QUICK TOUR OF THE BUDGETGetting more specific
K-12 Education
• Legislature restored $58 million of $94 million education cut
• Per-pupil funding frozen• Part of alcohol tax dollars fund
school construction and offsets formula-driven cuts for 4 low-income school systems
Medicaid
• No changes to eligibility or covered services• Most provider rates frozen or cut back 1%– Including waiver services like adult day care
• Hospital and nursing home assessments• Concerns about access to care
Health
• Local health – Level funded– 55% of pre-recession levels
• Addiction treatment– Budget is $6 million below ‘09 actual expenses
• Developmental disability services– $15 million for waiting list in alcohol tax
• Mental health– $15 million in supplemental budget for community services
Children’s programs
• Child care received supplemental budget funding, but a waiting list remains in place
Safety Net
• Temporary cash assistance– Caseload growth continues– $127 m projected shortfall– Federal funding remains uncertain
• $500,000 “Cash flow” cut to Rental Allowance Program
• Temporary Disability Assistance (TDAP)funding intact– Grant amount is $185/month
Department on Aging
• Funding essentially flat.• Waiting lists for most services– 17,000 on waiting list for home and community
care waiver
Pension reformselected provisions
Current Teachers & Employees
New Teachers & Employees
Employee contribution 7% (was 5) 7%
Benefit multiplier 1.8% 1.5%
Vesting 5 10
Early retirement Age 55 w. 15 years Age 60 w. 15 years
Normal retirement 30 years or Age 62 Age 65 or “Rule of 90”
COLAs Inflation up to 3% Inflation up to 2.5% if plan meets investment target or
1% if not.Funding 80% after 10 years
Retiree Rx Changesselected provisions
Current O’Malley Approved
Co-Pays(generic/preferred/non-preferred)
5/15/25 $310 deductible25% co-insurance
10/25/40
Out-of-pocket max(single/couple)
700/700 4,550/9,100 1,500/2,000
Retiree share of premium
20% 20% 25%
Budget savings (GF) -0- $22 m $14 m
Alcohol Tax
• Separate legislation passed after budget
• 3% special sales tax added to 6% regular sales tax– Beer, wine, and liquor
• $85 million– 15 m for developmental disabilities– 22 m for 4 local school systems– 47 m for school construction
Meanwhile, in Washington The biggest threats to senior programs over the next year could be at the federal level•Social security•Medicare•Medicaid•Grant funds for local services
Coming Attractions•Summer 2011 Executive budget process starts back up
•Fall 2011 Special session for Congressional districting
•January 2012 Regular Session
Showdown Time?
www.marylandpolicy.org
QUESTION
S?
Sources
• ACLU of Maryland• Loraine Sheehan Alcohol Tax Coalition• Maryland Department of Legislative Services• US Bureau of Economic Analysis• US Bureau of Labor Statistics
