The state of Maryland has a lot of money. And by a lot, I mean a once-in-a-generation unanticipated $5 billion in the bank. Most of this money is tax revenue collected as a direct result of billions of federal and state dollars in stimulus funds pumped into Maryland’s economy. The stimulus worked. It ignited the economy.
Here’s how we got to $5 billion. This past week, my office announced a $2.5 billion general fund balance to close Fiscal Year 2021, as well as an increase of nearly $1 billion for FY 2022’s budget projections and $1.37 billion for FY 2023.
However, having billions in surplus in the state’s coffers doesn’t mean all Marylanders are doing fine. How we got here demonstrates that we have, in fact, two very different Marylands.
About two-thirds of our population have been mostly unaffected by the economic calamity of this pandemic. These Marylanders were able to work remotely, invest their wealth in the markets, and run businesses unaffected by the conditions of the pandemic. Wages went up. Spending increased. Capital gains skyrocketed.
And it’s not just workers. It’s also mom and pop businesses on our main streets in the heart of our communities. These family owned businesses are the backbone of our economy. Most were unable to hire lawyers and accountants to navigate the complicated process for accessing federal and state relief funds. Sadly, tens of thousands of these businesses are now gone forever.
Because these billions of dollars in the state’s bank account are unassigned, Maryland’s elected leaders have a unique and rare opportunity to invest in our greatest asset — our people.
As this budget surplus proves, their strength is Maryland’s strength. The more stable their wages, the more robust their savings, the greater their ability to spend as consumers, then the greater our revenues year after year. By lifting up our lowest wage earners, everyone benefits.
The bottom third of wage earners deserve the freedom from want and insecurity that the top two-thirds of wage earners have demonstrated. By achieving this, they too can fuel the financial strength of our state just as the top two-thirds of our wage earners do now.
Let’s prevent the economic free fall many still fear today and create the foundation for the economic stability we can foster tomorrow.
It’s not enough to say we put money into these programs. We must be able to say we put the money in the hands of those who truly needed it and gave them a ladder to the prosperity they are capable of attaining with a truly level playing field.
Immediately, the governor and General Assembly can pass another state stimulus like we did in February. Our office sent out 431,000 payments of $300 or $500 to our state’s lower income taxpayers within days of passing the Maryland Relief Act. The second time around however, we can afford larger stimulus payments and increase the number of people who qualify for them. Let’s say we set aside just $1 billion for this immediate cash stimulus to our families most in need.
Then we should fortify our Rainy Day Fund, whose balance is currently $631 million and scheduled to be increased to $1.4 billion in the FY 2022 budget already passed. I recommend we divert even more to strengthen that fund now that our projected revenues are significantly higher. Why? Because we know that despite all of the projections, our economy can change in an instant and we are, in fact, still battling an unpredictable pandemic.
Now is the time for the state to come together and decide what truly defines Maryland when it comes to our budget priorities. I strongly encourage that we invest a significant percentage of this surplus in one-time priorities that help stabilize our rental markets and affordable housing, jumpstart transportation projects like Baltimore City’s Red Line, and fund innovative solutions for some of our most urgent environmental challenges.
We also must invest in Maryland’s main streets — our family owned hospitality and retail businesses. These businesses need an immediate infusion of cash, akin to the paycheck protection program, in order to keep their employees on the job while also ensuring they can maintain their bottom line. We should also consider staff signing bonuses to help bring back our main streets while providing those who have been out of work with a needed infusion of funds.
Let’s get this right and fix broken systems that have delayed unemployment benefits, rental assistance, child care provider payments and more. We also must ensure that taxpayers’ dollars are not landing in the hands of fraudsters — something the state has not done well during the pandemic.
We cannot repeat the disasters that occurred at the Maryland Department of Labor with unemployment disbursements and we must increase the pace of the distribution of rental relief funds. Hundreds of day care providers have been waiting for emergency grants from the Maryland State Department of Education for months. We must use some of these funds to fix these systems that are supposed to be providing critically needed funds quickly.
We often hear leaders talk about how COVID exacerbated problems that existed before the pandemic and will linger long after it finally passes. We must stabilize those who continue to suffer while preparing long-term solutions to inequities in our housing and labor markets that have been thrown into full view over the past year.
Marylanders deserve results, not more rhetoric, and this money is an opportunity to finally make good on that charge.
Peter Franchot is a Democrat and comptroller of Maryland. This piece originally was published in Maryland Matters.