With an eye toward making major investments in education and transportation, Gov. Wes Moore’s first budget plan calls for the state to ramp up funding for Maryland’s long-term education plan and to make a down payment on future roads, bridges and public transit costs, while keeping surplus funds flush in the case of a recession.
“This budget that you will see is not only a summation of our values, it’s strategic,” Moore said Friday at the State House in Annapolis. “It prepares us to weather the downside risks in the larger economy, but it also makes long-needed investments to position us for long-term growth.”
The Democratic governor’s $63 billion plan involves what he described as a historic $1 billion investment split between funding for the Blueprint for Maryland’s Future and for transportation projects that he said will be determined later.
Currently, the state has roughly $2 billion in surplus funds and $3 billion in a rainy-day fund. Moore’s plan would keep $2.5 billion in the rainy day fund and an additional “budgetary cushion” of $820 million in surplus funds in anticipation of an economic downturn.
While Moore and the legislature’s Democratic leaders are expected to largely align on their priorities, several General Assembly Republicans expressed caution about the governor’s proposed budget.
Moore and his budget secretary, former Johns Hopkins University chief financial officer Helene Grady, stressed at a news conference that the sunny economy of the last year is not expected to continue. They cited rising interest rates, the potential for higher unemployment and the lack of new federal stimulus packages.
The total plan is slightly lower than a $64 billion budget the legislature approved in 2022 under then-Gov. Larry Hogan, a Republican.
Moore’s capital budget totals $7.1 billion. It includes $52.5 million to be directed toward priorities identified by leadership in Baltimore and $3.6 billion toward transportation projects across the state.
Among Moore’s financial priorities are plans to:
- reallocate $500 million to the Blueprint for Maryland’s Future education program; provide $8.8 billion in funding for K-12 education, as well as $15 million for public school teacher recruitment and retention, and $1.1 billion for school construction;
- spend $500 million for transportation projects;
- offer $333 million for environmental protections;
- budget $171 million to permanently extend the Earned Income Tax Credit and Child Tax Credit, and
- accelerate the pace of raising the state’s minimum wage to bring it to $15 an hour by October instead by 2025.
The Maryland Board of Revenue Estimates predicted lower state revenue projections for 2024 in December. It pointed to the end of federal COVID-19 assistance, a decrease in capital gains income, and stagnant projections for withholding, sales, use, and corporate income taxes.
Moore also budgeted $18 million to fund the Department of Service and Civic Innovation, which he created Thursday to oversee a service year program for high school graduates. The program was one of his campaign promises.
Regarding the influx of funds for the Blueprint, which is scheduled to send an additional $3.9 billion to schools by the 2034 fiscal year, Moore referred to Hogan’s lack of support as contributing to an “uneven and sloppy” rollout. Hogan vetoed the bill to enact the Blueprint, citing cost concerns. The Democrat-controlled General Assembly overrode that veto and the plan became law in 2021.
“This work is critically overdue because too many of our students are trapped right now in a system that chronically fails them,” Moore said. “The Blueprint has been hobbled by an executive that refused to support this robust, and its intentional, implementation.”
Moore’s announcement followed a breakfast meeting with legislative leaders to go over the plan.
For the first time this session, lawmakers have broader budgetary powers and can move money around in a budget plan after the governor submits it. However, Moore and the Democratic leaders are expected to largely align on their priorities.
Senate President Bill Ferguson, a Baltimore Democrat, said the meeting was a “very productive, thoughtful, good conversation” and said he’s looking forward to a “collaborative environment” around budget talks.
Sen. Guy Guzzone, a Howard County Democrat who chairs the Budget and Taxation Committee, said the General Assembly may or may not use its new budgetary powers. He said it depends on whether legislators are able to continue to work well with the administration.
The likely scenario, he said, will be ongoing negotiations with the administration, then changes produced in supplemental budgets, rather than the General Assembly single-handedly moving the money around.
“We will see a lot of negotiation back and forth, and I’m looking very much forward to that,” Guzzone said.
House Minority Leader Jason Buckel, an Allegany County Republican, said in a statement that he hopes that “to the greatest degree practicable,” surpluses are placed in a state savings account or used to provide a tax cut for “Maryland’s hardworking families.” That, he said, would allow both residents and the state “to prepare for a possible economic downturn.”
“It is important to be principled and disciplined now, so we don’t burden our taxpayers later,” Buckel said.
On the Blueprint funding, Ferguson said it would be “the first real expansion” of the funding after Hogan’s initial veto of the plan.
Ferguson said he expected a focus on increasing the number of community schools, as well as an expansion of access to services for students who “come from limited means or who have English as a second language,” and for special education students.
He said increased investment in an accountability board is also “crucial” for the Blueprint’s first full fiscal year in operation.
Cheryl Bost, president of the Maryland State Education Association, said in a statement that she is “excited to work with a governor who has our backs and puts students first” and that Moore’s governorship “marks the beginning of a new era.”
Moore testified in favor of the Blueprint for Maryland’s Future during the 2020 legislative session.
“His prudent and strategic move to forward fund the Blueprint by $500 million will further enhance the sustainable funding needed to deliver these game-changing investments in our students over the long term,” Bost said. “It’s clear: Gov. Moore gets the importance of our public schools and investing in the future of our students.”