Baltimore City’s spending board greenlit a rare $25 million emergency withdrawal from the Rainy Day Fund Wednesday to balance a budget that had to be rewritten because of the financial impact of the coronavirus pandemic.
Mayor Jack Young’s administration issued the third ever request to dip into the fund after the finance department said it needed the emergency funds to balance the city budget.
City revenue has dropped sharply since the spring as fewer people drove, parked and stayed in hotels in Baltimore, all at the same time Baltimore was confronted with additional spending to deal with the pandemic. Budget director Bob Cenname said the city has no choice but to tap the Rainy Day Fund,.
“Fiscal year 2020 was really the perfect storm for our financial situation,” Cenname told the Board of Estimates. “We're using the money now and we're hoping that going forward, we won't have to dip in further.”
The Rainy Day Fund holds about $145 million that, in accordance with city policy, may only be used to balance “a post-adopted budget that has been impacted by an uncorrectable shortfall in budgeted revenues or expenses.” The city will eventually have to repay any withdrawals.
Baltimore ended the 2020 fiscal year with a $14.3 million deficit in June. The board’s approval to withdraw up to $25 million from the fund will allow the city to close that deficit; ultimately, the final withdrawal will only cover the deficit gap and may be less than $25 million. The withdrawal will balance the budgets of the fire, health and housing departments, which were especially walloped by the pandemic.
The Board of Estimates also authorized a transfer of $2 million worth of surplus funds from the transportation department to the Baltimore Police Department, despite protests from transit advocacy groups Bikemore and the Central Maryland Transportation Alliance.
"Are we going to continue this pattern of taking away money from essential services and putting it into the police department?" Bikemore executive director Liz Cornish asked the spending board.
City policy requires budget officials to take every reasonable action to minimize any withdrawals from the Rainy Day Fund, Cenname responded.
The city’s spending board authorized its first Rainy Day Fund withdrawal in 2010, for $17 million after the Great Recession, and its second in 2015, for $20 million after the death of Freddie Gray in police custody spurred protests and uprisings throughout Baltimore.