O'Malley To Cut $450M, Lay Off 205

Governor outlines Maryland budget cuts

ANNAPOLIS, Md. -- Nearly a half-billion dollars in Maryland budget cuts will include 205 layoffs, a $210 million reduction in state aid to local governments, furloughs for thousands of state employees and more cuts to health and higher education, Gov. Martin O'Malley said Tuesday.

The $454 million in cuts, which will be brought to the Board of Public Works on Wednesday, are part of a total $736 million the state will have made in the first two months of the fiscal year as the recession continues to drag down state revenues.

O'Malley said the administration decided on the layoffs because there was "clearly both a short-term and a long-term benefit." Even with almost three-quarters of a billion dollars cut in two months, the state is facing a $1.5 billion deficit in fiscal year 2011.

"We have our work cut out for us in FY11, and we also still have a little bit more to do, very likely, in this current fiscal year," said O'Malley, a Democrat, noting the challenges ahead.

Details on where the layoffs would be are being withheld until employees are informed. The layoffs, when taken along with eliminating 159 vacant positions, will save $17 million. The state has eliminated 3,200 positions, most of them vacant, since O'Malley took office in 2007.

The furlough plan affects about 67,000 state employees under the executive branch, and it will save about $73 million. The government will be shut down for five days around holidays. In addition, between three and five more days of pay will be lost by people who make more than $40,000, with people who make more than $100,000 taking five more days for a total of 10.

House Speaker Michael Busch, D-Anne Arundel, said he would be taking the full 10 days and would be urging 140 other delegates to do the same, although they cannot be forced to do so.


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Of the total $736 million in cuts, 60 percent will come from state agencies, while 29 percent will be drawn from local aid. Reductions to employee salaries and benefits make up the other 11 percent.

State money for local roads will be slashed by $160 million -- another big reduction after the Legislature cut aid by $162 million in the last session. Local health departments will lose about $20 million, while another $21 million will be cut from police aid. Community college funding from the state will be reduced by $11 million.

Counties should have been preparing for the loss of some state support, given the fiscal climate, Busch said. He also pointed out that the state has been weathering much of the storm while 10 counties recently reduced taxes.

"You're down to bone and gristle now when it comes to state government," Busch said.

In a sign of how much O'Malley has been forced to cut during his tenure, the fiscal year 2010 budget, which will be $13.2 billion once the cuts are approved, will be smaller than the budget three years ago, when the state's general fund was $13.6 billion.

Health care and higher education, which both took it on the chin in last month's $282 million cut, took another hammering in this round.

Additional cuts proposed by the administration include a $21 million reduction in Medicaid payments to hospitals, managed care organizations and other health providers. Another $36 million is being taken from savings at the University System of Maryland, Morgan State University, St. Mary's and aid to private colleges.

Despite the tough times, O'Malley has spared cuts to primary and secondary education, which was given the top ranking in the nation by Education Week earlier this year. The cuts in local aid amount to a 3 percent reduction in total state aid to local governments.

But when aid to education is taken out of the equation, the cuts amount to about 24 percent of total state aid to localities.

O'Malley decided to avoid making any cuts to local disparity grants, money that is directed to poor parts of Maryland. O'Malley said he believed it would too much of a burden on poorer residents.

The governor also chose to take less than the $250 million he had proposed earlier this month from local aid, citing the need to build consensus on the three-member Board of Public Works that includes O'Malley, Comptroller Peter Franchot and Treasurer Nancy Kopp.

"There is a burden of getting to a majority vote on the Board of Public Works just as there is in the Legislature," O'Malley said.

Copyright AP - Associated Press
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