HOUSE REPUBLICAN CAUCUS

Fiscal Vision for Maryland

March 1, 2011

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HOUSE REPUBLICAN CAUCUS
Fiscal 2012 Budget

Review of Governor’s
Budget Plan

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 HOUSE REPUBLICAN CAUCUS
Analysis of Governor’s FY 2012 Budget Actions (a)
Estimated Baseline Cash Deficit (Dec.) $(1,582)
Cuts in Baseline Spending $670
Special Fund Raids (b) 325
Tax & Fee Increases 245
Wishful Thinking (Lower Deficiencies) 243
Federal Stimulus 124
Other 70
Total Actions $1,677
Fund Balance Projected for FY 2012 $95
(a) Recategorized from official categories.
(b) Includes raid on TTF and $191 million in “bonding” to replace diverted Special Funds (POS and BRF). 3
 HOUSE REPUBLICAN CAUCUS
Governor’s Budget Actions
Cuts from Diversions and
Baseline Transfers
$670 $325
(40%) (19%)

Other
$70
(4%) Tax & Fee
Increases
Federal
$245
Stimulus Wishful
$124 Thinking (15%)
$243
(7%)
(14%) 4
 HOUSE REPUBLICAN CAUCUS
Total Operating Budget – Governor’s Plan

$36.0 The Governor has proposed a

$1 billion spending increase $34.1*
$34.0 in the Total Operating Budget. $33.1
$32.0
$32.0 $30.9
$29.6
$30.0 $28.8

$28.0

$26.0

$24.0
2007 2008 2009 2010 2011 2012

*Governor’s Proposal 5
 HOUSE REPUBLICAN CAUCUS
Governor’s Budget Spending Summary
Proposed
by Change 2012 vs.
Actual Working Governor 2011

2007 2008 2009 2010 2011 2012 Dollars Percent

General Fund $14.2 $14.5 $14.4 $13.4 $13.2 $14.6 $1.4 10.6%

State Funds $22.4 $23.0 $23.1 $22.2 $22.8 $24.8 $2.0 8.6%

Total Operating $28.8 $29.6 $30.9 $32.0 $33.1 $34.1 $1.0(a) 3.1%
Budget (All Funds)

(a) Major
increases include Medicaid (up $828 million or 13.6%), Health (up $115 million or 4.3%),
and Higher Ed (up $96 million or 2.0%).
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 HOUSE REPUBLICAN CAUCUS
Total Operating Budget: 1979-Present
($ in billions)

$35.0

The Governor’s Budget Plan

$30.0
continues a long-term pattern
$25.0 of unsustainable increases in
spending.
$20.0

$15.0

$10.0

$5.0

$0.0
1986

1990
1979
1980
1981
1982
1983
1984
1985

1987
1988
1989

1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
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*Governor’s Proposal
 HOUSE REPUBLICAN CAUCUS
GF Cash Balance Deficits Under Governor’s Plan
($ in millions)

$1,000
$680 The Governor’s Plan does not
solve the deficit and will lead
$500 to future tax increases.
$95
$0

-$500

-$1,000
-$1,100 -$1,148 -$1,175
-$1,500
2011 2012 2013 2014 2015 8
HOUSE REPUBLICAN CAUCUS
Fiscal 2012 Budget

GOP
Budget Plan

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 HOUSE REPUBLICAN CAUCUS
Vision for Maryland

We envision…
• A smaller, less-intrusive State government.

• A State government that operates consistently

within its means.

• A reduced tax burden on Maryland citizens.

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 HOUSE REPUBLICAN CAUCUS
Missed Opportunities 2003-2010
Session Proposal Cumulative
Impact to Today
2003 Enact slots legislation. $4.5-5.0 billion

2004 Retain 5% “trigger” provision for education. $4.5 billion

2007 Constrain budget growth to 1.5% (up $200 million) $2.8 billion
and cap GF spending to $13.8 billion in FY ‘08.

2007 (special) Adopt slow-growth budget in FY 2009 (3.5% growth) $1.8 billion
and free-market slots plan.

2008 Reduce growth in GF spending to 2.6% for FY ‘09. $1.2 billion

2009 Reduce total budget growth to 0% for FY ‘10. $1.2 billion

2010 Reduce GF spending by 2.7% for FY ‘11. $725 million11

 HOUSE REPUBLICAN CAUCUS
GOP Fiscal Goals

(i) Achieve a positive General Fund balance in

each of the next five years without raising
taxes.
(ii) Achieve a structurally balanced General
Fund budget by 2013.
(iii) Reduce the tax burden on Maryland citizens:
 Reverse the 2007 sales tax increase.
 Reverse the 2007 corporate tax increase.

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 HOUSE REPUBLICAN CAUCUS
GOP Fiscal Goals (Continued)

(iv) Reject the Governor’s proposal to raid the

Bay Restoration Fund and Project Open
Space and to replace the funds with new
debt.
(v) Replenish the Transportation Trust Fund
without an increase in the gas tax.
(vi) Maintain the Rainy Day Fund and strong
general fund balances.
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 HOUSE REPUBLICAN CAUCUS
Action Steps for FY 2012

• Implement an additional $621 million of

spending reductions in FY ‘12.
– $518 million decrease (3.5%) from FY 2011.

• Cancel proposed raids on Bay Restoration

Fund and Project Open Space.
• Cancel raid on TTF.

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 HOUSE REPUBLICAN CAUCUS
Action Steps in Future Years (FY 2013-2016)
• Constrain growth in the General Fund:
– 2013: 2%
– 2014: 2%
– 2015: 2%
– 2016: 4%

• Restore $500 million to the TTF (FY 2012-2016)

• Repeal the Special Session tax increases:
– Reduce sales tax rate from 6% currently to 5.5% in FY 2014 and
5% in FY 2015.
– Reduce corporate income tax from 8.25% to 7.0% beginning in
FY 2014.
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 HOUSE REPUBLICAN CAUCUS
General Fund Program Spending Comparison
($ in Billions)
Governor’s Proposal GOP House Proposal
2011-2015 Increase: $2.2 Billion 2011-2015 Increase: $354 Million
$18.0 $18.0

$17.0
$17.0 $17.0
$16.3
$16.0 $16.0
$15.6
$15.1
$14.9 $14.8
$15.0 $14.8 $15.0 $14.8
$14.5
$14.2

$14.0 $14.0

$13.0 $13.0
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
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 HOUSE REPUBLICAN CAUCUS
General Fund Budget Surplus/(Deficit) Comparison
(Cash-Basis Standard)

($ in Millions)
Governor’s Proposal* GOP House Proposal*
$1,000 $1,000
$680 $609
$680 $527 $434
$500 $375
$500
$0
$95
$0 ($500)

($500) ($1,000)

($1,500)
($1,000)
($2,000)
($1,148)
($1,100) ($1,175)
($1,500) ($2,500)
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
* DLS estimates *DLS estimates adjusted for GOP actions 17
 HOUSE REPUBLICAN CAUCUS
General Fund Budget Surplus/(Deficit) Comparison
(“Structural Balance” Standard)
($ in Millions)
Governor’s Proposal GOP House Proposal
$25 $1 $30
$0 $0

($400) ($400)
($426)
($800) ($800)

($1,200) ($1,200)
($1,170) ($1,155)
($1,188) ($1,185)
($1,600) ($1,600)
($1,562) ($1,562)

($2,000) ($2,000)

($2,400) ($2,400)
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
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 HOUSE REPUBLICAN CAUCUS
Summary
• The Governor’s Plan:
– Relies too heavily on transfers, taxes & fees and wishful
thinking
– Continues a pattern of unsustainable growth in spending
– Does not eliminate the deficit
• The GOP Plan:
– Represents new vision for Maryland
– Reduces unsustainable levels of spending
– Balances the State budget structurally
– Reduces the tax burden on Maryland citizens
– Cancels raids on the TTF, BRF and POS
– Increases funding to the TTF without a gas tax hike
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