Friday Five
Sept. 20, 2024 | This week's latest on Maryland business and government
1 — Maryland sees modest $479M surplus in FY24, with higher revenue growth than expected
Maryland emerged from the last fiscal year with about $479 million in uncommitted surplus after benefiting from a record amount of interest income and stronger-than-expected revenue growth, the state comptroller said last Friday. Maryland ended the previous fiscal year with $555 million in uncommitted funds, which was a fraction of its multibillion-dollar surpluses from the prior two years. The state has for years faced projections of budget deficits, largely driven by a lofty and expensive education plan, but infusions of federal COVID aid led to years with surpluses and delayed the need for spending cuts or tax increases.
Governor Moore's budget: It’s not yet clear what impact the modest surplus amount will have on the Moore administration’s plans for its roughly $63 billion budget proposal, which is expected to come out in January. Officials will be waiting to see how this latest report will affect future revenue forecasts.
2 — There is a national child care crisis, and the wrong time to suspend funding
Maryland alone has witnessed the closure of over 1,000 child care programs since 2020. The situation is dire for these small businesses, many of which are run by women from marginalized communities. The state's Child Care Credential Program is a lifeline for child care providers, allowing them to participate in training programs to further their education. These funds cover preservice training, required annual training, professional development and credential bonuses to supplement low wages. This support is crucial for maintaining a qualified workforce. Despite its success, the program was suspended June 30 of this year due to lack of funding in the Department of Education’s fiscal 2025 budget.
Collateral damage: Despite the department's statement that the program is expected to be restored come fiscal 2026, it still means that at least a year without funding for child care providers is headed down the pike, negatively affecting over 55,000 early childhood education workers and directly impacting over 20,000 program participants. This could lead to collateral economic damages, including the exasperation of current labor force challenges.
3 — The Fed has made a jumbo rate cut, here are five takeaways on what it means
The Federal Reserve on Wednesday lowered its benchmark rate by 0.50 percentage points, or double the more typical 0.25 percentage point cut. The moment marks a critical turning point in the Fed's fight against the hottest inflation in 40 years, which resulted in a flurry of rate hikes that pushed the bank's federal funds rate to its highest in 23 years. The Federal Reserve's decision to cut this month was influenced by weaker data from the labor market, with a disappointing July jobs report followed by a Labor Department data revision that showed the U.S. added 818,000 fewer jobs in the 12 months ended March 2024 than originally reported.
On the economy: At a Wednesday press conference, Federal Reserve Chair Jerome Powell stressed he is not seeing "anything in the economy right now that suggests that the likelihood of a downturn is elevated." Instead, he painted the portrait of a solid economy that has so far skirted a recession.
4 — Government shutdown deadline nearing, House stumbles on stopgap spending bill
Congress has 10 days left to approve a short-term government funding bill before the shutdown deadline, though leaders in the Republican House and Democratic Senate have not felt the need to start negotiations just yet. Leaning on a stopgap spending bill has been a regular part of Congress’ annual appropriations process for nearly three decades. During that time, lawmakers have consistently failed to approve all the full-year government funding bills before the Oct. 1 deadline, when the new fiscal year begins for the federal government.
Election year: The September struggle to approve a continuing resolution, which is intended to give lawmakers a bit more time to reach bicameral agreement on the full-year spending bills, has become increasingly dramatic with election-year politics. Nonetheless, avoiding a government shutdown and its far-reaching economic implications should be top priority for our elected officials in Washington.
5 — How an overlooked county landed the new FBI headquarters, tech jobs
Prince George’s County, Md. has nearly completely recovered from the considerable job losses caused by the pandemic and rebounded from the Great Recession, when it had the highest foreclosure rate in the state. Signals of the jurisdiction's revitalization range from splashy announcements, like the FBI last year picking Prince George’s as the site of its headquarters, to ambitious infrastructure projects, like plans for 10 additional Metro subway stations. From 2011 and 2021, the county led the state in job growth. In addition, the number of new business applications in the county more than doubled between 2012 and 2022, according to U.S. Census data.
Our take: When businesses invest in the communities they serve, it drives economic growth and prosperity. However, it’s crucial for state and local leaders to prioritize creating an attractive business environment in Maryland to sustain this momentum.
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