Increasing Medicaid Costs Create Budget Problems For Maryland

Legislative analysts, in their "grimmest assessment to date," on Oct. 30 "warned" the state's Joint Spending Affordability Committee that Maryland faces a "potential" $1.7 billion budget shortfall by the end of next year, the Baltimore Sun reports. The analysts attribute the "budget woes" to higher-than-expected spending increases -- $173.1 million over budget this year alone -- for the state's Medicaid program in conjunction with "plummeting" revenues in a weakening economy. To address the budget shortfall, Gov. Parris Glendening (D) recently canceled several construction projects and announced a "hiring freeze," moves that are expected to save $205 million. These savings, along with $725 million the state has in its "rainy day" fund, could cut the shortfall to $770 million, according to Warren Deschenaux, the state Legislature's chief policy analyst. Since the state's constitution mandates a balanced budget, lawmakers will need to make additional program cuts, raise taxes or find "new sources of revenues," the Sun reports. Overall, estimated revenues for the current and next fiscal year are $20.5 billion, while expenditures are estimated at $22.2 billion (Garland, Baltimore Sun, 10/31). For further information on state health policy in Maryland, visit State Health Facts Online.