Hogan wants to use $6M for catastrophic events fund

ANNAPOLIS — A portion of Gov. Larry Hogan‘s proposed use of the state’s rainy day funds to cover costs incurred during the recent riot and 10-day state of emergency is raising questions.

Part of the four-page proposal to use $20 million to cover the costs related to the events in Baltimore contains a provision to transfer nearly $6 million into a catastrophic event fund to pay for future emergency needs.

In that document, Hogan proposes to use more than $9 million on direct costs related to the riot, including more than $6 million to cover the costs of calling up the Maryland National Guard and out-of-state police and fire personnel. The balance goes to other programs, including nearly $6 million earmarked for the catastrophic event fund and $2 million for a grant fund for down payments for first time homebuyers.

“I’m not going to criticize anybody for making judgments going into something we have no experience in and could be problematical,” said Warren Deschenaux, director of the Office of Policy Analysis for the Department of Legislative Services.

“I can buy almost all of it, but I can’t buy the $5.9 (million),” Deschenaux said.

Deschenaux said state law gives governor’s the ability in emergency situations to make such transfers from the rainy day fund, referring to them as “super powers,” but said bolstering the catastrophic event account should be done as part of the regular budget process that begins each January.

Former Gov. Martin J. O’Malley transferred more than $7 million out of the account in 2010 to help balance the budget, leaving $173,000 that has remained largely unchanged.

“Who cares?” Deschenaux said. “The governor put in a budget. He did not put the money in and he’ll put another budget in in January. If it’s still that important to him, he can put the money in. He does not have to use his super powers to replenish the catastrophic event fund regardless of what O’Malley did.”

Deschenaux said the money should revert back to the state general fund instead.

Hogan announced the use of the funds in May but did not provide details.

Those details are part of a proposal that had been expected to be presented at Wednesday’s Board of Public Works meeting. Late Tuesday afternoon, the meeting was canceled with no reason given.

Spokesmen for both the governor’s office and the Department of Budget and Management declined to comment on the document or confirm details, and they stressed that the proposal was not yet finalized.

“The proper place to do that is not in the press,” said Douglass Mayer, a Hogan spokesman.

The draft proposal was presented to Deschenaux and representatives of Comptroller Peter V.R. Franchot and State Treasurer Nancy K. Kopp as part of a normal pre-Board of Public Works briefing, according to Mayer. Franchot and Kopp, both Democrats, make up the board, along with Hogan.

When asked about the transfer to the catastrophic event account, Mayer said: “That’s not a fact. It’s total conjecture and speculation.”

Mayer criticized Deschenaux’s review of the draft proposal.

“One would think that we would all be on the same team when it came to responding to the Baltimore riots,” Mayer said. “Oddly, the legislature’s top financial analyst is undermining efforts by both lawmakers and the administration to bring needed resources to our first responders and communities. DLS should get their facts right.”

Hogan’s plan to use the money takes the balance of a reserve account below 5 percent of the state’s operating budget — one of a number of key factors considered by Wall Street agencies that grade Maryland and other states on their creditworthiness.

“The use of these funds clearly underlines what was happening in Baltimore and the level of violence that was threatening our citizens,” Mayer said. These funds will be used to pay our National Guard, police and firefighters and all first responders. It’s hard to think of anyone who deserves it more.”