Eileen on Maryland’s Budget

In FY 2011 Maryland enters its third year of recession and fifth year of structural deficit, with ongoing revenues insufficient to cover ongoing spending. To address this year’s $2 billion shortfall, the state cut spending by $1 billion, and applied $1.27 billion in federal stimulus funds, one-time revenue fixes of $25 million, and $800 million in fund transfers. Budgetary balance in the coming year hinges on anticipated revenues from video lotteries and the assumption that Congress will extend the stimulus’s increased Medicaid matching provision to fill $389 million of the budget gap.

These tactics are not part of a one-time strategy prompted by the recession. Maryland has struggled to balance its budget for much of the last decade. The state’s structural deficit has continued to deepen since 2007, leading to the legalization of video lottery gaming to increase revenues. To date, these revenues have been insufficient to meet the gap. Budgetary balance has been achieved through fiscal maneuvers including fund sweeps, debt finance, federal aid, and the state’s Rainy Day Fund. In spite of these maneuvers, by 2015 the structural deficit is projected to grow to $1.65 billion.

That is Eileen, writing in the inaugural issue of The Maryland Journal. Congratulations to Eileen and thanks to the Maryland Public Policy Institute for offering what looks to be an informative new venue for scholarly work on state issues.