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Less Medicaid spending, low interest rates buoy Maryland budget

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Local,Maryland,Andy Brownfield

ANNAPOLIS ?-- Maryland officials can thank less spending on Medicaid and low interest rates for an improving budget, the legislature's fiscal guru said Tuesday.

"I think the result is very agreeable," Warren Deschenaux, director of the Maryland General Assembly's Office of Policy Analysis, told The Washington Examiner. "They have been able to accomplish a variety of things in terms of reducing the structural deficit, at the same time providing a cushion to prepare for what is happening at the federal government."

Deschenaux outlined to the Senate Finance Committee how Medicaid is able to meet a growing number of enrollees -- starting this year, it will cover people making up to 138 percent of the federal poverty limit -- without requiring additional state funding.

For one, the federal government is picking up the tab for the additional population until 2017. Deschenaux also attributed savings to changes made by the federal health care overhaul.

He said the governor's budget was buoyed by the lack of Medicaid growth, allowing the money that would have gone to the program to be moved elsewhere in the budget to fund day-to-day operations.

The budget also relies on borrowing for the next five years to replace money moved from special funds to the general fund.

"Interest rates are as low as they're going to be, so if you're going to borrow, it's the time to do it," Deschenaux said. O'Malley's proposed fiscal 2014 budget brings the structural deficit to the lowest point since he took office while stashing away millions into the state's rainy-day fund in case Congress fails to act on spending reductions and deep automatic cuts in federal programs kick in.

The governor took office in 2007 with a $1.7 billion structural deficit, the difference between state revenues and expenditures that isn't the fault of an underperforming economy.

Under the proposed budget, 90 percent of that deficit has been eliminated.

The proposal also bumps the rainy-day fund to $921 million, an increase of $153 million.

The General Assembly still must vote on the details of the budget before its 90-day legislative session adjourns in April.

abrownfield@washingtonexaminer.com

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