The next major deadline for the Maryland General Assembly’s 2019 legislative session is April 1, which is the date that the budget bill must be passed by both chambers. More often than not, the legislature is able to meet this deadline and it appears this year will be no different.
In Maryland, the Governor proposes a budget and the legislature is restricted in that it may only approve the budgeted amount or make cuts. The House of Delegates passed its budget bill on March 13 while the Senate of Maryland passed its version on March 21. As is the case in every legislative session, there are differences between the two versions of the budget that must be negotiated in a conference committee.
The Fiscal Year 2020 budget, which becomes effective July 1, 2019, amounts to $46.6 billion. A highlight of the budget is new funding to carry out initial recommendations of the Commission on Innovation and Excellence in Education, better known as the Kirwan Commission. There are differences between the funding levels proposed by the Senate and House, but new spending will likely fall somewhere between the respective recommended levels of $225 million and $320 million.
The budget also protects the $1.1 billion State Reserve Fund, better known as the Rainy Day Fund, and allows for $120.1 million in additional reserves. The importance of holding these reserves are numerous. Primarily, it helps Maryland weather potential economic downturns, which are becoming more likely as the current economic recovery shows its age. An economic downturn, in fact, may have already begun. Maryland’s expected revenues have been reduced for the current fiscal year by $138 million and roughly $131 million for Fiscal Year 2020.
Another reason for holding budget reserves is to help make the case for maintaining Maryland’s AAA bond rating. On March 19 it was announced that all three major bond rating agencies reaffirmed Maryland’s AAA rating. Maryland is one of only 12 states to hold this coveted designation, which keeps borrowing costs down by achieving lower interest rates on bonds.
It may not always be exciting or get the media attention it deserves, but the Maryland General Assembly’s most important function is approving a balanced budget. It is vital that Maryland has strong fiscal stewardship to best serve its citizens.