Washington’s Dysfunction Impacting Maryland’s Budget and Economy

THIS WEEK IN ANNAPOLIS

Washington DC’s Shadow Over Annapolis

From the federal tax bill to the federal shutdown, what happens in Congress has a direct impact on Maryland’s economy and budget. The Comptroller’s Office issued a detailed review of the effects of federal tax law changes on Maryland. Of specific note is a federal change in 529 college savings plans that, under federal law, would now allow such plans to be used to pay K-12 private school expenses. This new voucher scheme is projected to cost the state $20 million this tax year and $31 million next tax year, with the number possibly growing in the out year.

Maryland should reject private school voucher schemes of all kinds, including this new one created by Sen. Ted Cruz (Texas) in the federal bill. MSEA will be working with the General Assembly to address this issue and mitigate against the potential losses in revenue and terrible policy created by the federal action.

The shutdown costs the state of Maryland $5 million per day. While it was only three days this past week, another battle is set for February 8. One bright spot in the shutdown negotiations this week is that Congress did manage to reauthorize the Children’s Health Insurance Program (CHIP) for six more years. Had the program not been reauthorized, and the state covered the expenses to provide the critical coverage for 148,000 children, it would have cost the state $128 million.

More Hogan Budget Cuts

Gov. Hogan’s FY19 budget proposes to eliminate $50 million in pension payments. While his budget funds the required actuarial contribution ($1.6 billion), it completely cuts the General Assembly’s “sweeper provision,” added a few years ago to sweep unspent funds from the previous fiscal year into the pension system to help address unfunded liabilities. The sweeper added $50 million in the first year, but was cut last year by Hogan and is proposed to be cut again. While the pension system has had several strong years of investment returns and has reached the 70% funded status for the first time in a decade, these cuts make it harder for the system to reach the critical 80% funded threshold.

Last week, Up the Street detailed the fourth Hogan budget in a row with cuts in education programs, totaling $17.1 million in FY2019 and $88.9 million over the next five years if adopted. Here’s how the cuts add up:

· Quality teacher recruitment and retention grants: $5 million cut in FY2019, $20 million cut in FY2020–2023

· National Board Certification Teacher stipends: $2.1 million cut in FY2019, $16.8 million cut in FY2020–2023

· After-school and summer programs: $5 million cut in FY2019, $15 million cut in FY2020–2021

· College readiness scholarships for low-income students: $5 million cut in FY2019, $20 million cut in FY2020–2023

Information on the zeroing out of the pension sweeper and all other program cuts and details are included in the Department of Legislative Services’ fiscal briefing.

Hogan Legislation Seeks to Upend Maryland’s Approved ESSA Plan

Last week, we reported on the U.S. Department of Education’s approval of Maryland’s Every Student Succeeds Act (ESSA) plan. That plan was developed after nearly two years of receiving stakeholder input and after the General Assembly weighed in with the passage of the Protect Our Schools Act. Thanks to the General Assembly, Maryland is implementing a smarter, more balanced school accountability system than we had under No Child Left Behind (NCLB).

Disappointingly, Gov. Hogan introduced SB 301/HB 351 seeking to upend Maryland’s plan, reopen the state’s school accountability system, and double-down on the elements of NCLB that rate schools almost exclusively on standardized test scores. This legislation is ill-conceived and does nothing to move away from the test and punish failures of NCLB.

MSEA Briefs House Ways and Means Committee on Legislative Priorities

President Betty Weller led an MSEA panel discussion with House Ways and Means this week. The panel stressed the work and preliminary recommendations of the Kirwan Commission, including proposals to increase salaries, create more collaboration time, increase staffing to provide wrap-around services, provide universal access to career technology education, and expand public pre-k programs. In addition to sharing MSEA’s 2018 legislative priorities, we made clear our goals to advance legislation to put a lockbox on the Education Trust Fund and restore the education program cuts in Gov. Hogan’s FY19 budget proposal.

To view MSEA’s presentation, click here. It begins at the 17:47 mark of the video.

IN OTHER NEWS

Commission on School Facilities Briefs House Appropriations Committee

On Monday, Martin Knott, chair of the 21st Century School Facilities Commission, briefed the House Appropriations Committee on the draft final report of the Commission. The most notable recommendation is that the state lift its floor for annual school construction funding from $250 million to $400 million. MSEA had two representatives on the Commission and plans to support many of the recommendations if presented as legislation.

Hogan Sides with Trump by Eliminating Attorney General Resources

Last year, the General Assembly set aside $1 million and additional staff support in the budget to give Attorney General Brian Frosh the resources necessary to protect Maryland from the Trump Administration. With that funding, Frosh has been part of 19 lawsuits against the Administration. This year, Gov. Hogan eliminated that funding entirely, helping to protect President Trump from the scrutiny and expanded oversight of the Attorney General’s office.

Hogan Offers $5 Billion to Amazon

Gov. Hogan announced plans to offer Amazon $5 billion in tax credits and road and infrastructure spending if they build their second headquarters — now known as Amazon HQ2 — in Montgomery County. That means the governor is prepared to pay Amazon $60,000 in tax credits per job it creates, far exceeding any other corporate welfare deal the state has given before. It is unclear whether the tax revenue given up would be recaptured in increased economic activity — potentially putting education funding at risk in the future should Amazon pick Maryland based on passage of the bill.

CAMPAIGN 2018

Rushern Baker Builds More Establishment Support

While fundraising numbers reported last week failed to indicate a clear front-runner in the Democratic primary for governor, Prince George’s County Executive Rushern Baker continued to build his case as the establishment-backed candidate by picking up the endorsement of Montgomery County Executive Ike Leggett. Baker had already been endorsed by U.S. Sen. Chris Van Hollen and Attorney General Brian Frosh.

State Senate Races Take Form Following Fundraising Reports

The governor’s race may dominate headlines, but fundraising reports were due last week for State Senate candidates, too. Earlier this week, Maryland Matters’ Josh Kurtz wrote an update on the top 15 Senate races and where things stand now that candidates have reported their cash on hand as of January. The numbers indicate that we could be headed for quite a few competitive primary and general elections as Democrats seek to hold a super-majority in the upper chamber.

Note to readers: Up the Street is sent by email, published on the MSEA Newsfeed page, and linked through MSEA’s social media properties on Facebook and Twitter. Please share this sign-up link with friends and colleagues if they would like to join the Up the Street list.