1. Maryland’s Budget The Smell of Gunsmoke Neil Bergsman Maryland Budget and Tax Policy Institute April 18, 2011

2. Economic Context

3. Good Corporation profits at record levels

4. Bad Economic growth has resumed, but not enough to fuel a broad, sustainable recovery

5. Ugly Jobs are not coming back

6. Threats to the economy Federal spending cuts State and local spending cuts Not just Maryland Middle East Japan

7. BUDGET OUTCOMES The Big Picture

8. Good Budget is balanced through June 30, 2012 General fund balance $50 million Rainy day fund $681 million

9. Bad The budget incorporates over $1 billion in cuts from current-service levels – Teacher and employee benefits – School systems – Healthcare providers – Local governments

10. Ugly The budget leaves a billion-dollar long term problem for upcoming years

11. A QUICK TOUR OF THE BUDGET Getting more specific

12. K-12 Education Legislature restored $58 million of $94 million education cut Per-pupil funding frozen Part of alcohol tax dollars fund school construction and offsets formula-driven cuts for 4 low- income school systems

13. Medicaid No changes to eligibility or covered services Most provider rates frozen or cut back 1% – Including waiver services like adult day care Hospital and nursing home assessments Concerns about access to care

14. Health Local health – Level funded – 55% of pre-recession levels Addiction treatment – Budget is $6 million below ‘09 actual expenses Developmental disability services – $15 million for waiting list in alcohol tax Mental health – $15 million in supplemental budget for community services

15. Children’s programs Child care received supplemental budget funding, but a waiting list remains in place

16. Safety Net Temporary cash assistance – Caseload growth continues – $127 m projected shortfall – Federal funding remains uncertain $500,000 “Cash flow” cut to Rental Allowance Program Temporary Disability Assistance (TDAP)funding intact – Grant amount is $185/month

17. Department on Aging Funding essentially flat. Waiting lists for most services – 17,000 on waiting list for home and community care waiver

18. Pension reform selected provisions Current Teachers & Employees New Teachers & Employees Employee contribution7% (was 5)7% Benefit multiplier1.8%1.5% Vesting510 Early retirementAge 55 w. 15 yearsAge 60 w. 15 years Normal retirement30 years or Age 62Age 65 or “Rule of 90” COLAsInflation up to 3%Inflation up to 2.5% if plan meets investment target or 1% if not. Funding80% after 10 years

19. Retiree Rx Changes selected provisions CurrentO’MalleyApproved Co-Pays (generic/preferred/ non-preferred) 5/15/25$310 deductible 25% co-insurance 10/25/40 Out-of-pocket max (single/couple) 700/7004,550/9,1001,500/2,000 Retiree share of premium 20% 25% Budget savings (GF)-0-$22 m$14 m

20. Alcohol Tax Separate legislation passed after budget 3% special sales tax added to 6% regular sales tax – Beer, wine, and liquor $85 million – 15 m for developmental disabilities – 22 m for 4 local school systems – 47 m for school construction

21. Meanwhile, in Washington The biggest threats to senior programs over the next year could be at the federal level Social security Medicare Medicaid Grant funds for local services

22. Coming Attractions Summer 2011 Executive budget process starts back up Fall 2011 Special session for Congressional districting January 2012 Regular Session Showdown Time?

23. www.marylandpolicy.org

24. Sources ACLU of Maryland Loraine Sheehan Alcohol Tax Coalition Maryland Department of Legislative Services US Bureau of Economic Analysis US Bureau of Labor Statistics