Governor Larry Hogan Announces Fiscal Year 2020 Budget

Provides Record Investment in K-12 Education, Record School Construction Funding; Allocates $1.3 Billion in Reserves; Makes Responsible One-Time Investments in Infrastructure, Maintenance

ANNAPOLIS, MD – Governor Larry Hogan today announced major items in the administration’s fiscal year 2020 budget, which will be officially submitted on Friday, January 18. The governor’s budget fully funds not only the administration’s priorities, but also all legislative mandated spending programs without raising taxes, cutting services, or raiding dedicated special funds. The budget leaves $1.3 billion in reserves and continues – for the fifth straight year – to fund K-12 public education at an all-time record level.

“Once again, we will provide historically high, record funding for K-12 education – our fifth consecutive budget to do so,” said Governor Hogan. “Not only will every single penny that every single jurisdiction anticipates from the state for education be fully funded at 100 percent, but every single school system in Maryland will again see increased investment by the state.”

The FY 2020 budget continues the Hogan administration’s legacy of fiscal responsibility, adhering to recommendations from the Spending Affordability Committee and maintaining structural balance while making vital investments in education, healthcare, and job creation. This budget also makes prudent use of what is likely a one-time surplus to both save for the future and make critical infrastructure investments. More than $1.3 billion has been set aside to guard against any potential downturn in the economy while still investing $3.3 billion in Maryland’s transportation network and nearly $250 million for a wide range of improvements to facilities or projects that provide services to Maryland citizens, including $63 million in critical maintenance funding to Maryland higher education institutions.

“As a direct result of our fiscal discipline, belt-tightening, and business-friendly policies over the past four years, our state has had one of the best economic turnarounds in the nation,” said Governor Hogan. “We must remain vigilant about maintaining savings in order to be better prepared for those times when more flexibility is needed, while also making necessary, targeted one-time investments. That is what our budget has once again accomplished.”

The FY 2020 general fund operating budget totals $19.5 billion, continuing to provide record investment in the administration’s top priority – education. This budget provides $6.9 billion toward our public schools, going above and beyond the levels required by state aid programs. Aid to local schools grows by $347 million, which is the administration’s largest increase to date. The budget also reserves $200 million in state funding to implement the recommendations of the Kirwan Commission.

The governor’s proposed budget also includes the initial investment in the “Building Opportunity Fund,” a transformative and historic five-year, $3.5 billion school construction program. Reflecting that, this year’s school construction budget totals more than $438 million, the most ever in one year.

This budget continues our commitment to our world-class higher education system, providing a record $1.45 billion in state funds for the University System of Maryland, a 4.2 percent increase over last year. This includes $20 million, twice the level of last year, to develop academic programs in science, engineering, cybersecurity, and other critical areas. For the fourth year in a row, undergraduate tuition growth at Maryland’s public four-year institutions will be limited to 2 percent. In addition, this budget includes record funding for the 15 local community colleges funded through the Cade formula and provides funding for the Community College Promise Scholarship and the Governor’s Promise Plus Scholarship. Further, the capital budget includes $325 million for higher education projects.

Since taking office, the Hogan administration has delivered on the promise to grow the private sector, be more friendly to both businesses and families, create jobs, and turn Maryland’s economy around, going from losing 100,000 jobs to gaining more than 120,000 jobs, while delivering $1.2 billion in tax, toll, and fee relief. New this year, in order to encourage investments in Opportunity Zones all over the state, the budget dedicates $56.5 million toward attracting new or expanding businesses and developing our workforce.

The FY 2020 budget reaffirms Governor Hogan’s commitment to environmental stewardship, once again fully funding important environmental programs including Program Open Space, the Chesapeake and Atlantic Coastal Bays 2010 Trust Fund, and the Maryland Park Service, along with increasing incentives for zero-emission vehicles.

The budget also continues to ensure that Maryland’s most vulnerable citizens have access to critical healthcare services and other important programs by containing nearly $11.5 billion for Maryland’s Medicaid program, which provides health coverage to nearly 1.4 million Marylanders, including more than 153,000 children through the Maryland Children’s Health Program. The budget also includes nearly a quarter billion dollars for substance use disorder services, an increase of 20 percent over FY 2019.

This budget invests in Maryland’s dedicated state employees, providing at least a 3 percent raise to every state worker. Further, in order to improve the recruitment and retention of vital correctional officers at state facilities, the governor has allocated $13.1 million toward an additional 4 percent increase for these officers, along with $7.6 million to extend a bonus program through the rest of the current year.

The FY 2020 budget also accounts for the governor’s proposals for targeted tax relief, including expanding the More Jobs for Marylanders tax credit to include all 149 Opportunity Zones across the state, expanding the Hometown Heroes program, expanding the types of retirement income that are excluded from taxation, and to help all Marylanders make college more affordable, increasing the deduction for contributions to a 529 investment plan from $2,500 to $5,000 and increasing the permitted tax deduction on student loan interest to 100 percent.

Below are highlights of the FY 2020 Budget:

Investing in Education:

For the fifth consecutive year, the Hogan administration is providing record funding for K-12 education. The FY 2020 budget includes a $6.9 billion state investment in Maryland’s public schools, fully funding state aid programs. Aid to local schools grows by $347 million, the largest increase to date under Governor Hogan.
The governor’s education budget goes above and beyond required statutory funding formulas to ensure that every Maryland jurisdiction receives more direct education aid than in FY 2019. Baltimore City will receive an additional $11.1 million and Cecil County nearly $800,000.
This year’s school construction budget totals more than $438 million, the most ever in one year.
Consistent with passage of the constitutional amendment establishing the education “lockbox,” $125 million in gaming revenues are dedicated to the following educational enhancements: $65 million for school construction (including $20 million to start a revolving loan fund to assist local jurisdictions), $15 million for prekindergarten expansion, $4.5 million for Learning in Extended Academic Programs (LEAP) to provide extended academic programming for at-risk students at schools, $2.5 million for the Maryland Early Literacy Initiative, $2 million for innovative Career Technology Education programs, $250,000 to expand teacher recruitment and outreach, and $35.8 million for future initiatives as determined by the Kirwan Commission on Innovation and Excellence in Education.
In addition, $200 million in state funding remains reserved to implement recommendations of the Kirwan Commission.
The budget includes $300,000 to establish three new P-TECH schools in Maryland, bringing total funding for P-TECH schools to $1.2 million.
$20 million in state funding is included to expand access to prekindergarten throughout the state, bringing total state enhancement funding to $43.5 million. Under the Hogan administration, state funding to expand access to prekindergarten education has grown by 1,011 percent.
The Hogan administration has taken great strides this past year to enhance the Child Care Subsidy program, raising subsidy rates by 8 percent, eliminating the waitlist, and doubling income eligibility requirements. The FY 2020 budget includes an additional $34 million for the program to implement these policy changes and further increase subsidy rates.
State aid for local Head Start programs grows to $3 million in FY 2020, an increase of $1.2 million compared to FY 2019.
The Broadening Options and Opportunities for Students Today (BOOST) Program grows by $3 million to $10 million, fulfilling the governor’s commitment to double funding for the program over three years. BOOST provides scholarships for low-income students from areas with underperforming schools to attend non-public schools, giving them the opportunity for a better education.
The governor’s budget includes a record $1.45 billion in state funds for the University System of Maryland (USM), a $58.5 million or 4.2 percent increase over FY 2019.
Morgan State University receives $100.9 million in state funds, a $4.1 million increase from the current year. Nearly half of this increase will support deferred maintenance efforts to improve campus facilities and the remainder will be used for accreditation efforts, laboratory facility enhancements, and conversion of contractual employees to regular employees.
Statutory funding for St. Mary’s College of Maryland grows by 3.5 percent to $25.9 million.
The governor’s budget includes record funding for the 15 local community colleges funded through the Cade formula. The governor’s FY 2020 budget includes $268 million, a $7 million or 2.7 percent increase over FY 2019, in formula and non-formula grant funding.
Baltimore City Community College (BCCC) receives $40.2 million in state support in FY 2020.
The Sellinger program for Maryland’s independent colleges and universities is funded at a record $59.4 million, or $3.2 million over FY 2019.
For the fourth year in a row, growth in resident undergraduate tuition at Maryland’s public four-year institutions is held to 2 percent.

School Safety and Accountability:

The FY 2020 budget continues Governor Hogan’s commitment to supporting school safety with $10 million in capital grants to local school systems to make safety-related improvements to school facilities; an additional $3.5 million is included for safety improvements at non-public schools.
$10.6 million is provided for local school systems to hire school resource officers and to implement other best practices; approximately $400,000 is provided to support new school resource officers at the Maryland School for the Deaf.
The governor’s budget doubles to $2 million the amount available for upgrades and security personnel for schools and child care centers in Maryland deemed at-risk for hate crimes.
An additional $1.4 million and 11 positions are included to support the newly created Education Monitoring Unit and Office of Compliance and Oversight, enabling the Maryland State Department of Education and the State Board of Education to evaluate and investigate allegations of misconduct and corruption in local school systems.

Creating Jobs and Expanding Opportunities for Businesses:

As part of a series of initiatives proposed by Governor Hogan to further expand Maryland’s Opportunity Zone program, the FY 2020 operating budget includes $56.5 million in new funding to attract businesses and development and to continue to invest in Maryland’s workforce.
$16 million is provided to create the Maryland Technology Infrastructure Fund under TEDCO, as part of a long-term plan to leverage more than $500 million in planned investment over the next decade.
An additional $6 million in tax credits will be made available for companies that locate or expand in a Maryland Opportunity Zone – an amount increasing to $24 million over time.
$3 million is being invested to establish “Opportunity Works,” a job training program for businesses located in Opportunity Zones as part of the state’s nationally recognized Employment Advancement Right Now (EARN) program.
In addition to the $3 million for Opportunity Works, the FY 2020 budget includes $8 million for the EARN program, which continues as a leader of innovative and industry-led workforce development initiatives for the state.
Governor Hogan’s FY 2020 budget also includes $8 million for tax credits for manufacturing employers that create jobs in qualifying high-unemployment zones, established under the More Jobs for Marylanders Act of 2017.
The new public school construction initiative announced by Governor Hogan is estimated to create more than 27,000 new jobs during the five-year construction period.
Governor Hogan’s budget provides first-time funding of $1 million toward TEDCO’s Minority Pre-Seed Investment Fund, which provides financial and operational support for entrepreneurs from socially or economically disadvantaged backgrounds.
Governor Hogan’s budget maintains $12 million for the Biotechnology Investment Incentive Tax Credit and $2 million for the Cybersecurity Investment Incentive Tax Credit. In addition, businesses purchasing cybersecurity technology or services from Maryland companies will be eligible for up to $4 million in tax credits in 2019.
The governor’s budget provides $28 million in FY 2020 for the Maryland Economic Development Assistance Authority and Fund, the state’s most powerful economic development tool, a $3 million increase over the current year.

Tourism and the Arts:

The Maryland State Arts Council grows by $1.7 million, to $24.4 million in total funds – an all-time high.
In addition, Governor Hogan’s budget provides an additional $610,000 for the Tourism Development Board, bringing total funding to $10.2 million.

Building for the Future – Transportation & Infrastructure:

Investments in Maryland’s Transportation network totaling $3.3 billion include almost $1.7 billion for state highways, $221 million for the Purple Line Transitway, and $167 million in capital improvements for the Washington Metropolitan Area Transit Authority (WMATA).
The FY 2020 budget includes $255.9 million in Highway User Revenue funds to local jurisdictions, this is a $24 million increase from last year.

Treatment, Safety, and Correctional Services:

The FY 2020 governor’s allowance includes $247.8 million in general funds for substance use disorder services, a $41.8 million or 20 percent increase over FY 2019 levels.
Demonstrating the state’s commitment to combating the heroin/opioid epidemic, the number of substance use treatment beds licensed by the Behavioral Health Administration has more than doubled from nearly 1,500 in January 2017 to more than 3,300 in September 2018.
Funding dedicated to existing non-Medicaid substance abuse disorder and addiction programs totals nearly $172 million in FY 2020.
The budget includes $66 million over two years in new federal grants to initiate and expand opioid prevention and treatment services.
In keeping with the governor’s five-year $50 million commitment, the FY 2020 budget includes the third installment of $10 million to fund the activities of the Opioid Operational Command Center, which will now be housed within the Maryland Emergency Management Agency.
To expand behavioral health crisis response programs and services, the governor’s budget provides $3 million for grants to local behavioral health authorities.
The governor’s capital budget includes more than $6 million to support the development of addiction treatment centers and $2 million for recovery centers.
In FY 2020, Police Aid to Local Governments is funded at $74.8 million and Local Law Enforcement Grants are funded at $47.7 million. New this year are $3.6 million for Baltimore City Safe Streets and $1.9 million for Violence Intervention and Prevention programs, which include Baltimore City LEAD, Baltimore City State’s Attorney’s Office, and Baltimore City Strategic Decision Support Centers.
In FY 2020, Governor Hogan is launching a comprehensive set of initiatives totaling nearly $13 million to address violent crime in Baltimore City. This program strategically addresses crime through increased enforcement efforts and collaboration as well as additional support for prosecution and witness protection.
New this year, the FY 2020 budget includes $3 million to implement additional security measures at houses of worship at risk of hate crimes.
The FY 2020 budget provides $1.42 billion to house and rehabilitate a population of more than 18,000 inmates in correctional facilities, to detain arrestees and house pretrial offenders, and to supervise more than 70,000 individuals in the community. This year, the correctional population is projected to fall below 18,500 for the first time since 1991.
In accordance with the Justice Reinvestment Act of 2016, the budget reinvests $3.8 million in evidence-based strategies to decrease crime and reduce recidivism.

Protecting the Environment:

The fiscal year 2020 budget continues Governor Hogan’s commitment to fully fund transfer tax programs – including Program Open Space – with no diversions of special fund revenue to the General Fund.
Programs funded by the transfer tax receive $267.5 million, an increase of $14.5 million from FY 2019. This includes repayment of past transfers totaling $43.9 million, which provides additional support for state and local land preservation programs, Maryland Park Service operations, and capital maintenance and development projects in State Parks.
The Chesapeake and Atlantic Coastal Bays 2010 Trust Fund receives $53.6 million in FY 2020, marking the fourth year in a row that the Hogan administration has fully funded Bay restoration efforts.
In support of the state’s efforts to restore the health of the Chesapeake Bay, the FY 2020 budget includes $4 million in Bay Restoration Funds authorized by the Clean Water Commerce Act to purchase cost-effective nitrogen, phosphorus, or sediment load reductions.
Governor Hogan is also proposing to double the tax credit for zero-emissions vehicles from $3 million to $6 million.
The governor’s FY 2020 budget includes a total of $20.2 million for renewable energy programs, $13.7 million for energy efficiency programs, and $2 million for the Jane E. Lawton Conservation Loan Program and the State Agency Loan Program. Included in this is $3.2 million for a new federally funded State Buildings Energy Efficiency Grant Program.

Healthcare and Public Safety Net:

The FY 2020 budget includes nearly $11.5 billion for Maryland’s Medicaid program, which provides basic health coverage to nearly 1.4 million Marylanders, including more than 153,000 children through the Maryland Children’s Health Program.
The governor’s budget for Medicaid includes an additional $77 million in total funds for Community First Choice services to keep elderly and disabled adults out of nursing homes, $29.3 million to expand treatment access for those with Hepatitis C virus, nearly $6 million in new funding for a pilot program to reduce the incidence of diabetes, and an additional $4.2 million to provide a limited dental benefit to adults under the age of 65 who are dual eligible for Medicare and Medicaid.
Nearly $130 million is provided in FY 2020 to fund a 3.5 percent rate increase for behavioral health and developmental disabilities service providers and a 3 percent rate increase for most other healthcare providers. Included in this total is $42.5 million for the Developmental Disabilities Administration to benefit direct-care workers serving some of Maryland’s most vulnerable individuals.
The FY 2020 budget provides $1.3 billion for developmental disabilities community services, including an additional $46 million to expand services and nearly $15 million to continue two waiver programs to reduce the waiting list.
The governor’s budget includes an additional $6 million over two years to address increasing costs in the Breast and Cervical Cancer Diagnosis and Treatment Program.
The FY 2020 budget also includes $55.4 million in funding for aid to local health departments, an increase of $2.7 million or 5 percent compared to FY 2019.
To improve recruitment and retention of other hard-to-fill positions in state health facilities, the budget includes $4.4 million in general funds to provide salary adjustments for registered nurses, alcohol and drug abuse counselors, mental health counselors, and epidemiologists.
The FY 2020 budget includes $931 million in federal Supplemental Nutrition Assistance Program (SNAP) benefits for more than 346,000 households and $4.1 million in supplemental SNAP benefits for more than 24,000 households with a member age 62 or older.
The budget also includes $120.1 million in heating and electricity assistance benefits for 201,000 households, and $27 million to provide cash, medical, and housing benefits to 11,000 people with disabilities.
The FY 2020 budget includes $6.3 million to help mitigate the impact of the “benefit cliff” for newly employed recipients of public assistance. The new initiative will provide continued assistance for up to three months as clients transition to new employment, aligning closely with the recommendations of the Two-Generation Family Economic Security Commission.

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