Understanding the FY21 Budget Predicament

Budget Presentations Between DLS and DBM Show Agreement, Differences 

On Wednesday (July 8th, 2020)  and Thursday (July 9th, 2020) fiscal year 2021 (FY21) budget presentations were provided to the House Appropriations and Budget & Taxation Committees of the Maryland General Assembly.  Presentations were given by the Department of Legislative Services (DLS) and the Maryland Department of Budget & Management (DBM).

Click here to read the Presentation!

There is agreement between DLS and DBM that we have significant budget challenges going forward.  Both of them rely on revenue projections provided by Moody’s Analytics, a respected accounting firm.  From this point, though, they start to diverge on their projections.  DLS projects an FY21 budget deficit of between $1.5 – 2.0 billion.  DBM goes with the higher number.  They diverge even more on FY22 projections, with DLS looking at a $3.4 – 4.8 billion deficit, and DBM saying $4.6 billion.

DLS points to solutions that haven’t really been tapped yet: for example, the Rainy Day Fund has over $1 billion.  The Local Income Tax Reserve Fund could be tapped for $100 million.  All told there are 243 special funds and accounts that the State manages, with balances totaling over $2 billion (using FY19 figures, which are the most up-to-date numbers).

There are other unknowns that will play important roles in addressing the State’s budget.  It is still not know how much more money will be coming to Maryland from the Federal government.  The HEROES Act passed by the U.S. House of Representatives would provide almost $10 billion to Maryland, approximately split between state, county and local governments.  There are still determinations being made on how CARES Act money, the previous federal aid package, can be allocated.  Finally, it won’t be known until August how much money the State is actually receiving from business and individual tax payments from tax returns due July 15.

What we do know is that the State is in the midst of a pandemic health crisis.  And the health crisis is causing budget deficits which, by law, have to be addressed in order to balance the budget.  But Maryland needs its frontline workers – YOU – to fight the pandemic and keep Maryland moving forward.  There’s already a staffing crisis in Maryland – there was BEFORE the Coronavirus pandemic – and the budget cannot be allowed to be balanced on the backs of state employees who are delivering the services that Maryland needs.