Amid uncertainties, Maryland analyst gives fiscal warning

ANNAPOLIS, Md. (AP) — Maryland lawmakers need to do more to control state spending in future years in the backdrop of uncertainty about federal spending decisions and health care policy changes that could have a big impact on the state, a leading budget analyst for the state’s legislature told lawmakers Monday.

Warren Deschenaux, executive director for the Department of Legislature Services, said Gov. Larry Hogan’s budget plan makes hard decisions to balance the books for the next fiscal year, and basically does what governors and lawmakers have done for years: balance the budget for a year as required without taking more challenging long-term action. But he described the Republican governor’s plan to address mandated spending in future years is “relatively weak tea,” because it only applies to about 4 percent of the budget.

“A much more rigorous, systematic and comprehensive approach is called for under these circumstances,” Deschenaux said.

Doug Mayer, a spokesman for Hogan, said the administration was glad to hear Deschenaux outline a need for bringing down spending, but he disagreed with the analyst’s description of the governor’s proposals to reduce mandated spending.

“This General Assembly has never drank tea before and wouldn’t know the difference,” Mayer said.

Still, Deschenaux said “for all its bells and whistles, this is just another kick-the-can-down-the-road budget,” and he’s hoping the Democrat-controlled legislature will do more this year to address long-term problems.

“We need to do better. I hope that as this session goes forward we’ll have the opportunity to do that,” Deschenaux said.

Due to proximity to the nation’s capital, Maryland and Virginia are much more reliant on federal spending than other states. In Maryland, federal government wage income made up about 12 percent of the state’s total wage income in 2015, compared to about 4 percent in other states. And federal contract spending has comprised about 10 percent of Maryland’s private sector economy for years.

Simon Powell, an analyst with the Maryland Department of Legislative Services, said Medicaid and food stamps make up about two-thirds of the $13 billion in federal money the state will receive in fiscal year 2018. Those two programs have come under discussions at the federal level for changes in the way states receive the funds.

“So clearly, if something happens to those two programs it could have a significant impact on the state budget,” Powell told lawmakers.

Federal funding provided under the Affordable Care Act supports more than $1.4 billion in services in Maryland’s fiscal 2018 budget, according to state analysts. Maryland anticipates more than $7.7 billion in Affordable Care Act funding through fiscal year 2022.

Maryland’s fiscal year 2018 budget assumes that 312,000 people enrolled under the ACA Medicaid expansion will get full physical and behavioral health care coverage benefits at a total cost of care of $2.8 billion, according to a state analysis.

“If we don’t receive this level of funding in any replacement, then the state is going to face some pretty hard choices in terms of coverage or trying to backfill, to preserve the coverage that we currently have,” Powell said.

Maryland also is in a unique position, because the state’s all-payer model contract was approved through a federal agency established by the ACA. Failure to renew the current five-year contract would result in Medicare and Medicaid payments to Maryland being reduced by $2.3 billion annually.