Peter Franchot Comptroller COMPTROLLER I ofMARYLAND Sandra L. Zinck, CPA Director General Accounting Division J S erving the People September 9, 2020 The Honorable Peter Franchot Comptroller of Maryland Comptroller' s Office 80 Calvert Street Annapolis, Maryland 21401 Dear Comptroller Franchot: Enclosed you will find the statement of General Fund Balance for the year ended June 30, 2020. In addition, you will find a schedule of General Fund revenues and an analysis of the variances between the 2020 estimated and actual revenues prepared by the Bureau of Revenue Estimates. The State closed the fiscal year ended June 30, 2020 with a fund balance of $703.5 million in the General Fund. Of this amount $117.7 million was assigned by the 2020 General Assembly for fiscal year 2021 operations leaving an unassigned fund balance of $585 .8 million. Please advise me if you have any questions or would like additional information. Sincerely, ~Q Sandra L. Zinck Director r. SZ:mms Enclosure cc: The Honorable David Brinkley The Honorable Nancy Kopp Ms. Victoria Gruber Mr. Len Foxwell Ms. Sharonne Bonardi Mr. David Farkas 80 Calvert Street• P.O. Box 746 • Annapolis, Maryland 21404-0746 • 410-260-7820 • 1-888-784-0144 (MD) Fax: 410-974-3979 • Maryland Relay 711 • gad @marylandtaxes.gov General Fund Balance June 30, 2020 General Fund Balance, June 30, 2019 $ 2020 Estimated Revenues (Bd. of Revenue Estimates -March, 2020) Adjustments to revenue (see detail) Reimbursement from reserves for Tax Credits Other adjustments to revenue: Transfer from Revenue Stabilization Account Deduct: 2020 General Fund Appropriations: Appropriated by the 2019 General Assembly Deficiency Appropriations Legislative Reductions (see detail) Specific Reversions (see detail) Estimated Agency Reversions 974,188,580 18,721,180,859 15,151,265 27,607,094 158,000,000 19,418,808,286 239,359,112 (6,394,640) (66,492,745) (35,000,000) Net appropriations (19,550,280,013) Estimated 2020 General Fund Balance 345,847,785 Add: Excess of actual revenues over (under) estimates Excess of actual transfers over (under) estimates (102,226,648) (2,912,986) Add: Board of Public Works Reductions May 2020 Excess of Actual Reversions Over Estimates 120,661,000 342,103,971 (105,139,634) 462,764,971 Total General Fund Balance 703,473,122 Deduct: General Fund Balance Reserved for 2021 Operations Minus 2021 Estimated Surplus 345,847,785 (228,163,145) 2020 Unassigned General Fund Balance 117,684,640 $ A.1 585,788,482 EXHIBIT A GENERAL FUND BUDGET SUMMARY Detail - Fiscal Year 2020 Adjustments to Revenues - Other Maryland Health Exchange MDH Disproportionate Hospital Share MDH Audited Claims Ch. 605 of 2020 - Public Safety - 9-1-1 Fees Specific Reversions FY 2020 Restricted Funding GOCPYVS - Baltimore City Crime Prevention Initiative Comptroller - Cash Campaign of Maryland Comptroller - Private Letter Ruling Process MDH - Tuberculosis Grants MDH - Bed Registry MDH - Non-Opioid Pain Management MDH - Childhood Neurodevelopmental Disorders MDH - Hepatitis C Funding MDH - Prescription Drug Board MDH - MCO Report DHS - Two Gen. Grant Labor - EARN Opportunity Zones DPSCS - Staffing Study DPSCS - Correctional Officer Salary Enhancement MHEC - Promise Plus MHEC - Promise Program IT Upgrades DHCD - SEED Community Development Anchor Institution Fund DHCD - Baltimore Regional Neighborhood Initiative Commerce - MEDAAF TEDCO - Technology Transfer TEDCO - Opportunity Zones MDE - Hazardous Waste Reserve Fund - Sunny Day DBM - Excess FY 20 COLA Funding MSDE - TIF Funding MSDE - Longitudinal Data Center Contract Library Agency - Montgomery County Retirement MHEC - Community College Optional Retirement MHEC - Community College Promise Scholarship Legislative Reductions GOCPYVS - Children and Parent Resource Group DoIT- Automated Election Management System Agriculture - Dairy Margin Coverage Program Subsidy MDH - BHA Administrative Services Organization (ASO) contract savings DPSCS - Salary Savings MHEC - Maryland Community College Promise Scholarship $ $ $ $ $ $ 3,000,000 9,109,143 3,000,000 42,122 15,151,265 (3,678,339) (200,000) (255,946) (100,000) (100,000) (750,000) (1,800,000) (1,300,000) (750,000) (1,000,000) (950,000) (2,500,000) (500,000) (7,000,000) (2,119,250) (125,000) (2,500,000) (175,000) (1,250,000) (250,000) (13,980,000) (200,000) (460,000) (12,543,998) (2,514,340) (500,000) (787,872) (328,000) (7,875,000) (66,492,745) (156,500) (234,387) (216,253) (287,500) (2,500,000) (3,000,000) (6,394,640) Actual and Estimated General Fund Revenue Fiscal Year 2020 Fiscal Year 2020 INCOME TAXES Individual Corporation Estimated 1 Actual Difference from Estimate $ % Actual Fiscal Year 2019 Growth FY 19 - FY 20 $ % 10,698,874,684 1,051,808,219 10,587,326,518 1,011,262,547 111,548,167 40,545,672 1.1% 4.0% 10,272,351,915 1,033,109,278 426,522,769 18,698,941 4.2% 1.8% 11,750,682,903 11,598,589,064 152,093,839 1.3% 11,305,461,193 445,221,710 3.9% 4,634,873,635 4,951,863,180 (316,989,545) -6.4% 4,812,089,855 (177,216,221) -3.7% STATE LOTTERY RECEIPTS 548,511,872 530,950,114 17,561,758 3.3% 552,375,064 (3,863,193) -0.7% OTHER REVENUES Business Franchise Taxes Insurance Premium Tax 211,258,765 395,851,096 246,174,118 351,648,666 (34,915,353) 44,202,430 -14.2% 12.6% 245,064,807 335,168,061 (33,806,042) 60,683,035 -13.8% 18.1% Estate and Inheritance Taxes 197,174,594 196,946,663 0.1% 180,439,693 16,734,901 9.3% Tobacco Taxes Alcoholic Beverages Excises 362,911,842 30,208,980 348,559,925 32,878,348 14,351,916 (2,669,368) 4.1% -8.1% 356,696,875 32,534,251 6,214,966 (2,325,271) 1.7% -7.1% 47,675,980 29,296,097 58,537,470 31,753,652 (10,861,490) (2,457,555) -18.6% -7.7% 59,858,584 30,204,423 (12,182,605) (908,326) -20.4% -3.0% 60,565,828 46,797,602 318,296,284 57,402,016 50,000,000 323,246,907 3,163,812 (3,202,398) (4,950,623) 5.5% -6.4% -1.5% 64,296,997 50,239,933 374,609,065 (3,731,170) (3,442,331) (56,312,781) -5.8% -6.9% -15.0% 1,700,037,067 1,697,147,765 2,889,301 0.2% 1,729,112,689 (29,075,622) -1.7% 18,634,105,476 18,778,550,124 -0.8% 18,399,038,802 235,066,674 1.3% 200,000,000 - -100.0% #N/A 435,066,674 2.4% Total SALES AND USE TAXES District Courts Clerks of Court Hospital Patient Recoveries Interest on Investments Miscellaneous Total TOTAL CURRENT REVENUES Excellence in Education Fund 2 Volatility Cap 3 GRAND TOTAL 1 #NA 4 - 18,634,105,476 (42,218,000) 18,736,332,124 227,931 (144,444,648) (102,226,648) #N/A -0.5% (200,000,000) 18,199,038,802 The 2020 Legislative Session resulted in an additional $15.151 million in estimated revenues beyond the March 2020 official estimate; this table has been adjusted accordingly 2 The 2018 BRFA diverted $200M from individual income tax revenues to the Commission on Innovation and Excellence in Education Fund 3 Established by Chapters 4 & 550 of the 2017 Legislative Session and amended by the 2018 BRFA, see detail on next page 4 There is no “actual” result for the revenue volatility item. Rather, revenue volatility on this table simply limits the overall general fund estimate. For example, had we not had the volatility cap in place, general fund revenues would have been down $144.4 million. Bureau of Revenue Estimates, September 9, 2020 STATE OF MARYLAND State Reserve Fund June 30, 2020 (In Dollars) Beginning Balance - July 1, 2019 Revenue Stabilization Account (Rainy Day) A0101 (fund 0201) $ Investment Earnings 876,494,528.57 A0201 (fund 0202) Economic Development Opportunity (Sunny Day) A0301 (fund 0203) A0401 (fund 0204) $ $ 11,733,614.35 $ 500.00 Catastrophic Event Account Total 2,479,921.43 $ 14,911,702.67 Replenishments Ending Balance - June 30, 2020 $ 1,177,242,244.24 890,708,564.35 14,911,702.67 285,836,013.00 Distributions/Transfers Source: Dedicated Purpose Account 118,860,950.00 (a) 460,000.00 (75,000,000.00) (b) $ 43,861,450.00 464,250.00 (5,000,000.00) (c) $ 7,193,614.35 866,018.48 $ 3,810,189.91 405,621,213.00 (d) (79,133,981.52) $ 1,232,107,498.50 DAFRG110 & DAFRG400. (a) Budget Amendment #042-20 $20,000,000 transfer to MDH for Corona help was returned. (a) Budget amendment #043-20 $137,000,000 transfer to Dept. of Commerce for Corona help was returned. (b) Transfers to Transportation Trust Fund (BA0021-20). (c) JTY01T00 transfer to Dept of Commerce per DBM request. (d) Transfers from DHCD 2020.09.09 - State Reserve Fund FY 2020.xls 9/9/2020 7:28 AM Revenue Volatility Cap Implementation Fiscal Year 2020 Actual Estimated Non-Withholding Income Tax 4,815,834,485 4,657,622,691 State Share, % 62.4% 62.4% 3,003,316,457 2,904,508,155 State Share, $$ Volatility Cap Difference from Estimate 158,211,794 98,808,302 -42,218,000 Net State Share of NonWithholding Income Tax 3,003,316,457 2,862,290,155 141,026,302 Other GF Revenues 15,695,789,019 15,939,041,968 -243,252,950 Excess of NonWithholding Income Tax Over Capped Estimate 141,026,302 Gap in Revenues -243,252,950 Final General Fund Variance -102,226,648 Established by Chapters 4 & 550 of the 2017 Legislative Session and amended by the 2018 BRFA, the revenue volatility cap came into effect in fiscal year 2020. According to the statute, if the general fund closes with a deficit in revenue for the fiscal year compared to the March estimate, the amount of non-withholding income tax revenue that exceeded the capped estimate shall first be applied to close the gap in revenues for the fiscal year. In fiscal year 2020, non-withholding income tax revenues exceeds the capped estimate by $141,026,302, and the deficit in general fund revenue is $243,252,950. The excess amount is insufficient to close the entire gap in revenues; therefore no excess non-withholding revenue is distributed to either the Revenue Stabilization Account (Rainy Day Fund) or the Fiscal Responsibility Fund for fiscal year 2020.