Analysts flag statutory limits and recommend conditions on $180M climate and economic DPA spending

Jacob Cash, presenting the Department of Legislative Services analysis for the Budget and Taxation Committee, said the fiscal 2026 allowance for the State Reserve Fund decreases by $10,000,000 to just over $250,000,000 and that proposed dedicated purpose account (DPA) spending includes about $180,000,000 drawn from the Strategic Energy Investment Fund to implement the state's climate pollution reduction plan.

DLS raised statutory-usage concerns, recommending budget language to make the $180,000,000 contingent on legislation expanding allowable uses. Cash pointed to proposed DPA allocations that include $80,000,000 for solar and geothermal projects on public facilities, $50,000,000 for solar development on state property and $50,000,000 for solar and geothermal projects for local school districts. DLS also recommended direct reductions and deletion of contingent language related to several BRFAA provisions that would otherwise shift large amounts into the general fund.

Helene Grady, secretary of the Department of Budget and Management, and DBM deputy secretary Mark Nicole responded for the administration. Grady said the administration intends to maintain a rainy day fund balance of just over $2,000,000,000 in fiscal 2026 and defended the placement of economic initiatives in the DPA as a combination of timing and multiyear planning. "As noted in the analysis in light of our current economic uncertainty the Moore administration has budgeted to maintain the rainy day fund at just over $2,000,000,000 in fiscal 20 26," Grady said.

Cash and DBM also discussed other DPA items and BRFAA transfers. DLS noted proposed transfers of $203,400,000 to the general fund in BRFAA, including $63,500,000 for cybersecurity projects and $62,900,000 for a new state veterans home that failed to obtain expected federal funding; $2,500,000 was to remain for the veterans home to cover lingering design liabilities. DLS detailed recommended DPA reductions on a range of economic initiatives and urged closer statutory alignment with the intended purposes of funds coming from the Strategic Energy Investment Fund.

DBM disputed several DLS reductions. The department said projected economic returns and job creation justify the $128,000,000 of targeted investments the administration ties to the economic growth agenda; DBM estimated those investments could drive $515,000,000 in economic activity and support or create about 2,600 jobs. DBM also disagreed with DLS recommendations to cut funds for biomarker testing required by Chapter 322 of 2023, the capital of quantum initiative at UMD College Park and cyber workforce grants, arguing each item is a policy priority or addresses urgent needs.

Committee members asked about the rationale for placing initiatives in the DPA rather than in agency budgets. DBM said timing, the desire to group the economic growth agenda for visibility and the multiyear nature of some projects (for example, certain climate investments) explain the choice. Lawmakers asked for project-specific detail for items that appeared general in the analysis, including community-college allocations and labor strategic-initiative funding; DBM committed to follow up with more granular information.

There were no formal committee votes during the State Reserve Fund discussion. DLS's list of recommended actions includes deleting contingent BRFAA language, making the $180,000,000 appropriation contingent on statute amendments, and trimming or delaying several DPA initiatives; DBM submitted written testimony defending most proposed investments.