Hogan says COVID-19 caused “fiscal crisis”

By Jade Fadrowski
Baltimore Watchdog Staff Writer

Gov. Larry Hogan said Tuesday the state is facing “an unprecedented fiscal crisis” caused by the COVID-19 pandemic.

Hogan, who issued the dire statement after a meeting of the Board of Revenue Estimates, said state and local governments nationwide are struggling and soon will face $500 billion in shortfalls over the next two fiscal years. He pointed to Moody’s Analytics, which also said more than 4 million jobs are at stake.

Hogan said projections by the Bureau of Revenue Estimates forced him to implement a budget freeze six months ago across the state. He said he directed the Department of Budget and Management to cut budgets in all state agencies.

“Today’s revenue estimates are still nearly $1 billion less than what was budgeted prior to the pandemic,” said Hogan. “Because of our early and aggressive actions, Maryland’s fiscal situation remains challenging, but is significantly less painful than it could have been.”

As a result of the federal response, stimulus dollars, and unemployment response, he said that revised revenue projections are billions more than expected in May. The current fiscal year is $1.4 billion higher and fiscal year 2022 is $2.1 billion higher.

“Spending in a lot of ways has shifted out of impacted sectors such as recreation, leisure activities, food services, and into other sectors such as construction and home improvement stores,” said David Farkas, acting director of the Revenue Estimates Bureau.

Throughout the pandemic, Hogan bragged that Maryland has been able to keep more than 70 percent of its economy open. Maryland’s Board of Public Works approved a series of targeted reductions, he said.

Spending in Maryland has been stronger than expected, personal savings have gone up, and income tax revenues are higher than projected.

“It’s a sugar high rather than being anything economically sustainable,” said Maryland Budget Secretary David Brinkley.

The governor admitted Maryland is in a better position both economically and health-wise than much of the country but recognized the state is battling the biggest fiscal challenge it has ever faced.

“We will continue to plan for the worst, press Congress to act on additional relief and make the tough decisions necessary to balance our budget,” Hogan said.