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Key components of Hogan’s budget cuts go to committee

March 1, 2017

ANNAPOLIS, Md. (AP) — The state legislature this week began the arduous task of determining which programs and services will suffer cuts and funding deferments in 2018.

The pain comes in the form of a bill called the Budget Reconciliation and Financing Act — or the BRFA, as it’s known.

The bill’s provisions reduce funding mandated by the Democrat-controlled legislature by amending the laws that authorize that spending.

Republican Gov. Larry Hogan, is constitutionally required to submit a balanced budget, but the BRFA process allows him to do so by proposing reductions in spending that would otherwise be required by law.

This year’s bill proposes cuts to a slew of programs ranging from police aid, to community college funding, to high school robotics programs.

To appreciate the significance of the BRFA, there are a few things to understand about Maryland’s budget laws:

First, the governor submits a budget every February. According to the state constitution, that budget must be balanced — it cannot spend more money than the state will have in revenue.

Second, the legislature routinely passes laws that require a certain amount of money to be spent on certain projects. Sometimes, these laws call for a specific dollar amount to be spent on a project over one or more years, other times they use a formula that allocates funding based on variables, such as the number of students attending a school.

These are called legislative mandates, and the governor’s budget must account for their predicted expenditures. At present, approximately 83 percent of the annual budget is determined by those mandates.

The BRFA is a bill that proposes amendments to already-passed pieces of legislation in order to reduce the total amount of mandated spending in the budget.

For example, the 2017 BRFA changes a law that allocates $5 million in 2018 to an agricultural program called the Next Generation Farmland Acquisition Program to instead split the $5 million over 2018 and 2019, essentially freeing up $2.5 million in the budget this year.

A more contentious change in this year’s BRFA cuts $15 million from the development of the Prince George’s Regional Medical Center.

At a hearing before the House Appropriations committee Tuesday, state Secretary of Budget and Management David Brinkley said that the programs affected by the BRFA are all new programs — established by legislative mandates — that have never been funded before. He said these specific programs were chosen to be cut because “now is not the time to create new, long-term spending.”

One of the largest items in the BRFA is a $40 million reduction in the amount of money the state is legally mandated to contribute to its reserve fund. The governor says the reduction is justified because the reserve fund is intended to compensate for unexpected budget shortfalls, from which Maryland is suffering this year.

One challenge of the budget amendment process is that it pits programs against one another.

Because the governor’s proposed budget is essentially written in stone — the legislature has very limited power to amend that document, it’s basically pass or fail — the budget items on the BRFA are the most likely to be cut. If the Democrat-controlled legislature wants to spare a program, they generally need to amend the bill to deepen cuts to other programs.

For example, at a hearing on Tuesday, representatives from the Maryland Agricultural and Resource-Based Industry Development Corporation testified in defense of a program that makes it easier for young farmers to purchase farmland. The program was supposed to receive $5 million in 2018, but the BRFA splits that sum so it will instead get $2.5 million in 2018 and 2019. The representatives from MARBIDCO say they are fine with this change, they were instead testifying to persuade lawmakers not to cut their remaining funding, which the Department of Legislative Services has proposed, to pay for other programs, such as the Prince George’s Regional Medical Center.

Prince George’s County Executive Rushern Baker has railed against the possibility of cutting funding to the hospital. On Tuesday, Baker told the University of Maryland’s Capital News Service that he thought the funding plans for the center had been completely resolved last year and called the proposed cuts a “travesty.”

Brinkley defended the proposed cuts, emphasizing that, by placing the cuts in the BRFA, the governor has left the legislature with the power to fully fund the hospital project by making cuts elsewhere.

Senate President Thomas V. “Mike” Miller Jr., D-Calvert, Charles and Prince George’s, said Tuesday that he understood that the governor is trying to balance the budget and that, due to the budget shortfall, there is going to be “shared pain across all the departments.”

Maryland’s House of Delegates and Senate must both pass a balanced budget bill by April 3.

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