In trying to form budgets for the next fiscal year, governments across the country are predicting – guessing is the better term – how much of a disastrous economic impact the COVID-19 health crisis will have.
On the state front, Comptroller Peter Franchot reported last Friday the state should expect a 15% loss – about $2.8 billion — to the state’s general fund. The number is derived from losses in revenues from drastic drops in sales, income and withholding taxes and various fees.
It’s going to be months before the economic recovery takes place for citizens, businesses of all sizes and government. There will be a tremendous adjustment period in the coming months. We worry life may in the future be known as pre-COVID-19 and post-COVID-19. The economy will surely rebound in time, but this will be a long-term recovery that will take years, according to leading economists.
Consequently, Maryland is not in a position to launch the pricey recommendations of the Kirwan Commission, a state task force charged with overhauling schools.
The state, like other governments and every business, will use its reserves to balance out the losses from this unprecedented economic shutdown. It will take years to rebuild these emergency funds to adequate levels. It’s imperative to ensure dollars are available in the event of emergencies like this in the future. We have learned Mother Nature is not the only type of emergency reserves are needed for in this country.
We think a pause is needed on the approved education bill, which currently sits on Gov. Larry Hogan’s desk awaiting his signature. Hogan has instituted a budget freeze and said clearly any bill increasing state spending will not advance. Clearly, the Kirwan bill – officially called Blueprint for Maryland’s future, is just that, needing millions annually over 10 years to reform education.
Hogan should veto the education reform bill for now and legislators should not override it. Maryland needs to recover before advancing programs and initiatives it cannot fund. There is an amendment in the legislation allowing for a delay should Maryland’s budget revenues drop by 8% at any time. Public education is to still be funded, but only at the Maintenance of Effort level, which keeps with inflation annually.
Approving this bill without a promise and commitment of state funds will result in unfunded mandates for local education systems. The initiatives proposed to improve education are all well intentioned and necessary, but they are not emergencies. Formalizing a plan to get Maryland’s economy on track, citizens back to work and the marketplace open are more important at this time. Critical funds will be immediately needed to support these efforts.
