Maryland’s Fiscal Health for 2014

mdEver wonder how Maryland’s fiscal health compares to nation-wide statistics? Rest assured, the Maryland Department of Budget & Management’s 175-page “FY 2014 Budget Highlights” catalogue provides ample information. Additionally, it comes replete with easy to read charts on revenue and expenditure streams, in which one can easily compare the FY 2012 with FY 2014. Click here to access the full report.

Some interesting facts do stand out. For instance, the Higher Education Revenues that Maryland will accrue in FY 2014 total to around 4 billion, which is only slightly under the 4.3 billion the state will pull in from Sales Tax. Combined, the Higher Education Sales Tax and the Sales tax account for 23% of the 2014 revenues.

Here’s a question for you—What’s the source of funding that will account for 27% of the state’s 2014 income? This is the Federal Fund, a source of state revenue generated at the federal level and a type of funding that comes with legal mandates on what programs and services the money can be spent on by the state. If you’re feeling adventurous, you should make it a point to thumb through the “Maryland General Fund and Budget Restoration Fund Revenues” report presented to Governor O’Malley.

So, having been in office since 2006, Governor Martin O’Malley will be attempting to build off of his previous successes when it comes to budgetary planning and fiscal responsibility. In what is termed a “Balanced Approach” by the catalogue, O’Malley has maintained Maryland’s AAA bond rating for all three rating agencies, a feat that only 8 other states can boast about. In terms of going forward, O’Malley’s budget has invested in targeted tax credit initiatives upwards of $27.5 million for strategic job sectors, including film and biotech industries.

Despite the fact that state and even national economies are often made and un-made by the larger forces of globalization—whose caprice one never can quite predict—the report does provide evidence that at least for now Maryland is in the black. Maryland’s Bureau of Revenue Estimates (BRE) predicted in its December 2012 report (the same detailed revenues report cited earlier) that revenue growth for FY 2014 would be 2.3%, compared with 5.2% growth in FY 2013. But it must be noted that these predictions were made in 2012, when the full effect of the federal sequestrations had yet to be registered and when the idea of a government shutdown wasn’t even entertained, at least by the majority of those in public office.

Moreover, while the first mention of the pension system in the report cites that O’Malley restored the “financial health of the pension system,” according to an October 30 (2013) report by the Maryland Public Policy Institute the state of Maryland has accrued debt of up to 22.5 billion over the past five years, mainly due to the state’s teacher and employee pension promises. Despite the reported pension “fixes” of 2011, the institute—whom believe these issues can be resolved on the free-market—claims that the pension problem is here to stay. Rebutting the claims of the institute, however, the executive director of the state retirement agency R. Dean Kenderdine states that, “The reforms of 2011 have placed the defined-benefit plan of Maryland on a path of sustainability.” The path to sustainability is exactly what we saw this past summer, when the pension fund regained all its losses since the Great Recession, totaling 40 billion. This is in addition to accruing an additional 800 million. And since 2009, the state has added added about 12 billion in earnings, which averages about 10% a year.

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