Maryland has dodged the big bullet.
That is the very good news out of the 2022 budget unveiled by Gov. Larry Hogan this week. The $49.35 billion spending plan is about 2 percent less than the 2021 budget passed last spring, the rainy-day fund is more than $200 million smaller than it was and all spending not related to dealing with the COVID-19 pandemic is frozen.
But it could have been so much worse.
Hogan said that the state did not experience the worst-case economic scenario that many forecasters predicted last Spring when the widespread shutdowns of businesses to stem the spread of the virus caused massive layoffs. Tax collections crashed and spending soared to pay for unemployment benefits and other costs associated with the crisis.
It really looked bleak.
However, Hogan said, Maryland’s economy recovered fairly quickly from the initial shock, with the federal government’s aid, in the first major stimulus package. A second package was approved in December and President Biden is proposing a third relief bill that should further cushion the impact of the pandemic on the economy.
“Our state economy didn’t experience the drastic downturn expected by leading national economists, and we now face deficits that pale in comparison to the initial doomsday predictions,” Hogan said in a letter to legislative leaders.
The Biden proposal is expected to include direct aid to state and local governments, which would obviously further strengthen Maryland’s financial position.
The budget does not include widespread layoffs or furloughs of state employees. It provides $7.5 billion into primary and secondary education and $803 million into school construction.
While the state’s budget picture is rosier than had been expected, that does not mean that many residents have not been crushed by the impact of the pandemic. The state unemployment rate at the end of 2020 was 6.8 percent, almost double the rate of 3.6 percent at the end of the previous year.
A Biden relief package is expected to be approved by Congress in some form, especially now that Democrats have taken control of both houses. It will likely include direct stimulus payments to almost all Americans of $1,400 in addition to the $600 that was provided in the December bill.
A direct payment not based on need is not the most efficient way to help those people hurt the most, but the infusion of cash will help the economy keep growing.
In addition, Hogan has promised $1 billion to help the neediest Marylanders, with increased payments to the working poor who are already eligible for the earned income credit, a program targeted to help employed people who make low incomes.
The relief package will help struggling small businesses, allowing them to keep the first $12,000 in sales tax receipts rather than sending them to the state.
Democratic legislative leaders were generally pleased with the Hogan budget. They said they would study the plan closely but expected to make some changes in the details to give more aid to those hurt the most by the pandemic.
Sen. Guy J. Guzzone of Howard County, chair of the Senate Budget and Taxation Committee, told the Washington Post that the budget needs to address the growing need for tutoring, access to broadband, mental health, and programs that address health care disparities.
“I think he’s done a good job of presenting a budget to us,” Guzzone told the Post. “We’re going to try to take it to the next level to do some good work.”
The good news about the budget will allow Marylanders to breathe a sigh of relief, even if we need to remain guarded in our optimism. It is just one ray of hope on the horizon that we will be able to return to some kind of new normal.