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In April 2007, the Maryland Department of the Environment convened a Fiscal Analysis Steering Committee to analyze ten years of the Department’s revenues and expenditures to assess MDE’s fiscal health. It is clear that over the years the Department has continued to do more with fewer resources. We did not however have substantive data to support what was readily apparent. The purpose of the fiscal analysis was to provide a detailed financial analysis on which to base future policy, programmatic and budgetary decisions.
The fiscal analysis shows that the Department’s revenues have not kept pace with expenditures, resulting in real and projected revenue shortfalls in many program areas. The projected revenue shortfalls are related only to current Department activities, and do not account for new needs to better protect public health and the environment.
The demand on MDE’s programs has increased each year. New federal and state mandates have been added annually, while funding and personnel allotments over the past several years have not kept pace with inflation or workload increases. For example, the federal Environmental Protection Agency has implemented 120 new substantive rules since 2004 without any increase in funding to the states. Similar actions have occurred at the State level. In 2006, a statutory change now requires county comprehensive plans to include water supply, wastewater capacities, and water quality requirements as part of land use plans. Implementing this new function required four new positions, although none were provided through the budget process. This scenario has been repeated many times over the past ten years.
Given the fact that revenues have not kept pace with non-discretionary and other costs, the agency is increasingly reliant on special fund balances – most of which are decreasing. If changes are not made, the agency will have to reduce full-time equivalent staff (FTEs) by 44 per year beginning in FY2009. This reduction would be the equivalent of eliminating one large regulatory program annually.
The Fiscal Survey is now being used as a basis for reassigning resources and to prioritize Department activities. First priority will be to activities that provide the greatest environmental benefit and public health protection, while reducing or eliminating low risk, low benefit activities through administrative, regulatory or legislative changes. MDE is evaluating options for revenue enhancement, with the goal of fully supporting program costs. Click here for additional information.
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