On March 23, the House began debate on the FY12 budget plan. The Appropriations Committee had three main goals in balancing the budget this year in its work on the budget: (1) address the State's structural deficit and viability of the retiree benefit system <see article under Eye On Annapolis> and (2) fund education programs to ensure a strong future for the State's knowledge-based economy.

Unlike the federal government, the State cannot deficit spend, so the State's operating budget must be balanced each year.  The term "structural deficit" refers to when projected revenues do not meet planned spending in the outyears. For instance, in December 2007, revenues for FY12 were projected to be $17B and there was no significant structural deficit. However, as a result of the global recession, revenues for FY12 are projected at $15B, so the $2B gap is the structural deficit. 

This year, despite stabilizing revenues, the State faced a $2B structural deficit. The budget, as introduced, eliminated 35% of the structural deficit. The House improved on this by reducing the State's structural deficit by over 40% and cuts ongoing spending by $800 million. Below are some highlights of the House budget plan:

 Conservative Spending Plan

- Reduces $2B structural deficit by 40% by cutting ongoing spending by nearly $800M

- Balances the budget without raising new taxes

- Maintains a 5% Rainy Day Fund ($803M). Maryland continues as one of only 8 states in the country that has not tapped its Rainy Day Fund during the global recession

For further details on this plan, click here.