From the Washington Times:
Maryland exceeded revenue projections and finished its most recent fiscal year with a $400 million fund balance but should save the money and cut spending in preparation for lean economic times, the state comptroller said Thursday.
Comptroller Peter V.R. Franchot on Thursday released the state’s final financial numbers for fiscal year 2011, which ended June 30, revealing that the state collected $13.5 billion in general fund revenues – $314 million more than officials initially projected. After fund transfers, the state finished with a $400 million fund balance.
Mr. Franchot, a Democrat, called on legislators and Gov. Martin O’Malley to keep the money in the state’s rainy-day fund for at least six to 12 months to help weather difficult times that could intensify with growing doubt over the nation’s economic future.
The answer of course is —we are broke!
Marylanders, don’t get too excited by a measly few hundred million laying around, it’s petty cash compared to the billions in pension liabilities Maryland has.
Check out this story in the Washington Examiner last week (MD, VA retiree systems seen as unsustainable):
The pension systems in Maryland and Virginia remain a huge liability for already beleaguered state budgets, and the peril is growing as state officials bank on extremely optimistic investment returns during uncertain economic times to pay off soaring retirement costs.
Both states face roughly $17 billion in unfunded pension liabilities and Maryland has wracked up a tab nearly that high in health care commitments for retirees.
To make those payments, both states would need to experience at least a half-decade of double-digit investment returns to draw pension funding in line with expectations — a prospect that analysts dismiss as unrealistic.
“We as a state are not sufficiently prepared for the most likely scenarios,” said Anirban Basu, president of Sage Policy Group in Baltimore. “Investments have to return better than we expect them to for the Maryland pension system to proceed smoothly.”
Basu said he was concerned that Maryland, “already one of the most heavily taxed states,” would turn to “tax-weary residents” to account for any future losses.
Read it all and keep the link because there is lots more useful information in it.
Then there is the transportation fund shortfall of oh, only around $800 million (and a one billion $ overall shortfall!).
From the Washington Examiner this week:
The Maryland Senate’s budget committee is examining tax and fee increases that would generate much-needed revenue for the state’s depleted transportation fund, as lawmakers prepare to head into an October special session at least $800 million short of what they need to meet Maryland’s transportation needs.
Lawmakers have unsuccessfully tried to pass similar measures to replenish the transportation fund, which Gov. Martin O’Malley has repeatedly raided to help plug annual billion-dollar budget gaps.
O’Malley has drained nearly $700 million from the fund — which pays for all road and rail maintenance — since fiscal 2009 and he recommended another $100 million fund transfer in his fiscal 2012 budget, when the state was facing a $1.6 billion shortfall.
Now time is running out for the General Assembly to take action on returning money to the state’s transportation coffer.
The state is facing a budget shortfall of at least $1 billion next year and O’Malley’s 28-member commission on transportation funding has recommended a minimum infusion of $800 million annually to meet the state’s most basic transportation needs.
So, for all of you who saw that first yippee-we-have-a-surplus story and wondered, as I did, what that was all about, I guess now you know—chump change in the overall scheme of things.
* Franchot was quoted in the Washington Post saying if Gustavo called, he (Franchot) would hop in his car and run right over to see what his Sandinista friend needed.