Gov. Martin O'Malley

Gov. Martin O'Malley (D ¿ MD.) speaks to a crowd in front of the statehouse about raising the minimum wage in Maryland. (Karl Merton Ferron / Baltimore Sun / January 14, 2014)

Gov. Martin O'Malley said he plans to unveil a $39 billion spending plan Wednesday that contains no new taxes or fees but calls for a 3 percent increase in college tuition.

The final budget of O'Malley's two terms fails to reach the goal he set early in his administration to erase the state's structural deficit. As a result, lawmakers a year from now will have to find $188 million in cuts because revenue isn't expected to rise fast enough to cover automatic increases in some programs.

But the balanced budget he is proposing for fiscal 2015 does close a short-term gap of nearly $400 million without asking taxpayers for more money, he said.

Most of the savings come from lower-than-anticipated expenses such as a cheaper tab for state employee heath care and pensions. Some savings come from one-time fixes, including raising $18 million by selling some old medical evacuation helicopters that were replaced by a new fleet.

The tuition increase, which follows four years of 3 percent hikes and a tuition freeze before that, is among the lowest state higher education increases in the country, according to College Board, the nonprofit group that oversees the SAT.

The governor outlined some details of his proposal in an interview Tuesday. The budget proposal goes to the Maryland General Assembly, which can make revisions before approving it.

Republican leaders questioned how O'Malley could propose a budget larger than last year's without any new taxes or fees.

"The devil's only in the details," said Minority Whip Kathy Szeliga of Harford County, who sits on the House Appropriations Committee. "How do you spend $2 billion more when you don't have an economy ticking along to support growth?"

In the interview, O'Malley said that over his tenure he has "made a lot of tough decisions to reduce the overall size of government."

Last year, the state raised the tax on gasoline to help cover the cost of transportation projects over the next few decades. The year before, lawmakers raised income taxes for those who earn more than $100,000. That came after approval of casinos that have produced hundreds of millions of dollars of revenue, and earlier increases in sales and cigarette taxes as the state struggled with the economic recession.

State employees also had been subjected to furloughs.

"There were a lot of unpopular things we did, and we knew they were unpopular at the time," O'Malley said. "But we also knew they were the right decisions from a fiscal responsibility standpoint that we needed to make. … We elect leaders not just to make the easy decisions or tell us we can all eat cake and lose weight or that cotton candy's good for you."

The new budget proposes to expand tax credits for biotechnology and cybersecurity businesses, two initiatives launched by the governor as a way to boost the state's economy. It also would keep $800 million in the state's "rainy day" fund for emergencies and end the year with a $37 million left over. Some state budget analysts recommend that the cushion should be $100 million.

O'Malley aides have said his budget is also expected to contain money to expand pre-kindergarten and fund new programs to prevent domestic violence, two issues Lt. Gov. Anthony Brown has backed in his campaign to succeed O'Malley.

ecox@baltsun.com