Maryland Board Approves O'Malley Budget Cuts

More than $361M in cuts approved

Wednesday, Nov 18, 2009  |  Updated 3:57 PM EDT
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Maryland Board Approves O'Malley Budget Cuts

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A state panel on Wednesday approved more than $361 million in cuts and other revisions to Maryland's general fund budget, bringing total budget revisions since the fiscal year started in July to more than $1 billion.

The revisions recommended by Gov. Martin O'Malley's administration and approved by the Board of Public Works were higher than the roughly $300 million that had been expected. They include eliminating 112 state jobs, more than half of which are currently filled, for a savings of about $5.7 million.

"There have been no easy decisions," O'Malley said before the unanimous vote by the three-member board he chairs. The governor
noted that with the changes to the fiscal 2010 budget approved Wednesday, expected general funding spending for the current year
is $500 million less than the spending level for fiscal 2007.

"I don't think anybody this side of the Depression can find a time when that has happened," he said.

But O'Malley and state budget secretary T. Eloise Foster warned that even with Wednesday's changes, the state still faces an
estimated $1.5 billion shortfall in fiscal 2011.

"We're still going to need to go back through all the state agency budgets," said Foster, adding that a fund balance of about $120 million remaining after Wednesday's actions may need to be tapped for further spending reductions in the current fiscal year.

"We're less than half the way through it, and this is our third major cut," state comptroller and board member Peter Franchot
noted.

The work force reductions approved Wednesday include eliminating 21 jobs associated with the downsizing of a facility in Rockville for children with severe emotional disabilities. Eighteen other positions within the Department of Health and Mental Hygiene also
would be eliminated.

State treasurer Nancy Kopp, the third member of the board, said cutting funds and jobs is the last thing the panel wanted to do.

"I think this is extraordinarily painful,"she said. "I look forward to a better time."

In the meantime, officials expect to save $55 million, including $21.3 million in general fund revenues, by reducing Medicaid
payments to hospitals, and $20.8 million, including $7.3 million in the general fund, by reducing the budget for the Maryland
Children's Health Program because of lower-than-expected enrollment.

An additional $11 million is expected from denying unnecessary Medicaid services and ineligible claims, and $7 million from
reducing public funding for private colleges and universities. A transfer from the University System of Maryland's fund balance will
boost the general fund by an additional $25 million.

The board reduced the appropriation to the state's rainy day fund by $25 million, while maintaining the fund at the mandated 5
percent of estimated general fund revenues. It also agreed that all of the $129 million in anticipated corporate tax payments related
to a $4.5 billion joint venture between Baltimore-based

Constellation Energy Group and France's EdF go to the general fund.

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