State Budget Practice Report Cards and Budget Resource Guide

Maryland averaged an A in budget forecasting for 2017 through 2019, earning the top mark for using long-term revenue and expenditure estimates and consensus forecasting. Yet it fell far short during the period in the other four categories evaluated. 

The state averaged a C in budget maneuvers, although its annual grade dropped to D in fiscal 2018 after an estimate of lower gaming revenues led Maryland to use bond premiums—a form of upfront revenue on financial transactions—to offset a $23.6 million appropriation for debt service. The state also deferred Medicaid spending and used a bond refinancing to lower debt service costs for the following three years. In addition, in fiscal 2018 and 2019, Maryland used annual surpluses to help support recurring general fund expenditures.

It received a B average in legacy costs. Maryland has made annual contributions for public worker pensions in line with actuarial recommendations since 2016, and its pension funding level rose from 65 percent that year to 70 percent in 2018, matching the total for all states. While annual funding of other postemployment benefits (OPEB), principally health care, met the actuarially determined annual amount in 2018 and 2019, it did not in the previous year.

Maryland’s C average in reserve funds for the latest period was the lowest of the eight states in the South Atlantic region. Six earned Bs, while Virginia posted an A. Maryland fails to tie its reserve fund levels to volatility and lacks effective policies for fund disbursements. 

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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 presented here are taken from the 2020 Volcker Alliance report, Truth and Integrity in State Budgeting: The Balancing Act, which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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