SB 30
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
Senate Bill 30 (Senators Elfreth and Guzzone)
Budget and Taxation Appropriations
State Finance and Procurement - Appropriation Reductions (Board of Public
Works Budget Reduction Clarification Act)
This bill limits the Governor’s authority to reduce specified appropriations, subject to the
approval of the Board of Public Works (BPW), to up to 25% of the legislative
appropriation as approved by the General Assembly for any eight-digit program in the
State operating budget in any fiscal year. The bill also increases, from three business days
to seven calendar days, the advance notice that BPW must give before it may approve a
proposed reduction. The bill takes effect July 1, 2021.
Fiscal Summary
State Effect: State expenditures may be affected to the extent that future interim budget
reductions exceeding the bill’s limit for a particular agency would be approved by BPW in
the absence of the bill, as discussed below. The expanded notice requirement can be met
with existing resources; however, it may delay BPW action on proposed reductions.
Revenues are not affected.
Local Effect: Local revenues and expenditures may be affected, as discussed below.
Small Business Effect: None.
Analysis
Current Law: With the approval of BPW, the Governor may reduce up to 25% of any
appropriation that the Governor considers unnecessary or that is subject to budgetary
reductions required under the budget bill approved by the General Assembly. However,
the Governor may not reduce an appropriation for:
the Legislative or Judicial branches of State government;
payment of the principal or interest on State debt;
public schools, including the Maryland School for the Deaf;
the Maryland School for the Blind; or
the salary of a public officer during the term of office.
Required Notice
At least three business days before BPW may approve a proposed reduction, the Secretary
of Budget and Management must (1) publish notice of the proposed reduction on the
Department of Budget and Management’s website in a machine-readable format;
(2) provide the notice to BPW for publication on the board’s website; and (3) provide
written notice to the Legislative Policy Committee, the Senate Budget and Taxation
Committee, and the House Appropriations Committee.
Notice of the proposed reduction must include the name of the State agency or program for
which the appropriation is intended; a brief narrative summary of the impact of the
proposed reduction on the agency or program; the amount of the proposed reduction in
dollar and percentage values; the fund source of the appropriation subject to the proposed
reduction; and any projected reductions in workforce as a result of the proposed reduction.
State Expenditures: Since fiscal 2007, cost containment reductions have been
implemented via BPW several times: in each budget from fiscal 2007 through 2010 and
in fiscal 2015, 2017, 2018, 2020, and 2021. Most recently, in July 2020, BPW adopted
$413.2 million in cost containment actions, including $394.9 million in general funds. The
Attorney General’s Office has consistently advised that the 25% limit on budget reductions
authorized under § 7-213 of the State Finance and Procurement Article applies to the
agency or departmental level rather than the item or program level.
In fiscal 2009 and 2010, BPW approved multiple rounds of reductions in order to balance
the budget. According to research conducted by the Department of Legislative Services, in
fiscal 2009, three agencies (the Maryland Energy Administration, the Department of
Information Technology, and the Department of Housing and Community Development)
experienced cumulative general fund budget reductions in excess of 25% of their
fiscal 2009 legislative general fund appropriation; however, the cuts were less than 25% of
the agencies’ total legislative appropriation and, thus, allowed under current law.
Under the bill, the 25% budget reduction limit applies at the program level, as opposed to
the agency or departmental level. Further, the bill specifies that interim budget reductions
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may not exceed 25% of the legislative appropriation for any eight-digit program in the
State budget bill in a given fiscal year. Thus, State expenditures may be affected to the
extent that future interim budget reductions exceeding the bill’s limit for a particular
agency would be approved by BPW in the absence of the bill. Reductions exceeding 25%
of the legislative appropriation for any program are precluded.
The bill’s impact on agency- and program-level expenditures depends on the distribution
of future cost containment reductions across State programs. To the extent such reductions
are more widely spread across State programs as a result of the bill, some State agencies
may experience greater or lesser reductions. Nevertheless, the total amount of reductions
taken in any given year is likely not materially affected since such reductions are proposed
and approved when necessary to keep the budget in balance.
Local Fiscal Effect: Local revenues and expenditures are affected to the extent that State
grants to local governments are affected. The precise impact to local governments,
however, is uncertain, due to the reasons discussed above.
Additional Information
Prior Introductions: None.
Designated Cross File: HB 133 (Delegate Korman) - Appropriations.
Information Source(s): Board of Public Works; Department of Budget and Management;
Department of Legislative Services
Fiscal Note History: First Reader - January 18, 2021
rh/mcr Third Reader - March 18, 2021
Revised - Amendment(s) - March 18, 2021
Analysis by: Elizabeth J. Allison Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 30/ Page 3
Statutes affected: Text - First - State Finance and Procurement - Appropriation Reductions (Board of Public Works Budget Reduction Clarification Act): 7-213 State Finance and Procurement
Text - Third - State Finance and Procurement - Appropriation Reductions (Board of Public Works Budget Reduction Clarification Act): 7-213 State Finance and Procurement