State Budget Practice Report Cards and Budget Resource Guide
Maryland is one of twelve states to enjoy a top AAA bond rating from the three leading US credit rating companies. The rating indicates that the risk of default on the state’s general obligation debt is deemed to be low. Yet like its eleven peers, Maryland has weaknesses in its budget procedures that may leave it vulnerable to fiscal shocks caused by recessions.
For example, in budget maneuvers—the use of one-time actions to plug gaps and achieve balance—Maryland received a C average grade for fiscal 2015 through 2019. In 2015–17 it used several maneuvers, including paying operating expenses with debt, and in 2018 it began to defer some recurring expenditures to future years. In 2019, the state put off a mandated $15 million expense for its Program Open Space, which provides assistance to localities for development of recreational areas.
In legacy costs, which include public employee pensions and other postemployment benefits (OPEB), principally health care, the state also averaged a C. In the five years studied, Maryland funded OPEB in line with actuarial recommendations only once, in 2018. By contrast, the state made actuarially determined pension contributions every year from 2016 through 2019; its 2019 pension funding ratio of 72 percent was 1 percentage point above the total for all states. In 2016 its pensions were 65 percent funded.
The state fared best in budget forecasting, with a top A average. It produces multiyear forecasts for expenditures and revenues, has a consensus revenue forecasting process, and provides explanations for revenue growth projections, including information about assumptions that went into the estimates.
To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.
The report cards found here contain grades of the state's budgetary practices during the fiscal years of 2015 through 2019. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eight US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.