Governor Hogan to Tap Special Funds for Supplemental Budget

John J. Walters Apr 10, 2015

Former governor Martin O’Malley will always be reigning champion of the special funds transfer. But Governor Larry Hogan is following O’Malley’s lead, albeit to a small degree—so far. Hogan recently proposed a $44.8 million supplemental budget that includes transfers from Program Open Space (a favorite of O’Malley’s for plundering) as well as a few other funds.

The Daily Record gives a fairly even-handed review of Hogan’s supplemental budget, which includes additional spending that is largely in line with what he said he would do during his campaign: additional police positions, tax breaks for military and first-responders, and tax breaks for businesses contributing to non-public schools. None of that comes as a surprise.

Should Maryland residents be concerned that Hogan is already using transfers from special funds to pay for his agenda, despite saying that those sorts of “gimmicks” wouldn’t be in his playbook? Possibly, but as Del. Maggie McIntosh (D-Balt. City) said, “Welcome to governing.” It’s not as if a new governor gets to completely reinvent the state budgeting process and wipe the slate clean upon arrival.

Transferring money from special funds to the General Fund has been standard operator procedure for years. And, to be completely fair, it is by no means an invention of O’Malley’s. But the fact that it has been such a staple of each and every year’s budget—even after Hogan spoke out against it—shows that Maryland’s budgeting priorities are mixed up.

When additional taxes are instituted, there is usually a promise that the money raised will go toward a specific purpose that will serve the community. An excellent example of this is the increased tax on alcohol passed a couple years ago, which was supposed to help Maryland residents with disabilities. Where is that money going now? Tracking where tax money goes isn’t exactly easy, but even in May 2011 the disabled were already getting left out in the cold.

Drifting away from tax revenue’s intended purpose in service of the ever-hungry General Fund is by no means uncommon. Every year, a Budget Reconciliation and Financing Act is passed that moves money around from one fund to another. The budget reconciliation process is a useful tool for reducing temporary deficits. It is supposed to keep things on an even keel, and it largely does.

It also provides a convenient way for legislators to use funds for their own purposes without admitting that they’re not actually cutting spending as much as they would have us believe—or that we may be contributing too much to a particular fund year after year.

Since Maryland residents were willing to ignore the multitude of transfers from special funds made under O’Malley’s watch, it’s unlikely that we’ll even blink at the comparatively modest transfers proposed by Hogan. But the fact that he’s already resorting to them should be a reminder to be skeptical of any and all new taxes proposed for “no-brainer” “for-the-children” programs. Chances are, the money won’t be used for the stated purpose for very long.