Democrats propose Md. budget reductions

The Baltimore Sun

House Democrats recommended last night about $148 million in cuts to Gov. Martin O'Malley's $30 billion budget, a proposal that puts off most tough decisions on how to handle Maryland's long-term budget problems until next year.

But Republicans in both the House of Delegates and the state Senate say much more drastic reductions are needed now - even to the state's landmark education funding initiative - to stave off huge tax increases.

The House Appropriations Committee's suggested trims to O'Malley's proposed budget for the fiscal year beginning July 1 generally amount to reductions in what the governor wants to increase rather than cuts in what agencies received this year.

The largest single cut, $26 million, would be achieved by maintaining current limits on Medicaid services. Others involve reductions in the number of new staff authorized for the attorney general's office and other state agencies.

Del. Norman H. Conway, the Appropriations Committee chairman from the Eastern Shore, said the Republicans' push for larger cuts is "not socially responsible." He said O'Malley submitted a budget below the General Assembly's spending guidelines - the first time a governor has done so in years - and that the committee did enough to put the state on a path to solve its problems next year.

"The governor didn't cause our structural deficit, but I believe he will solve it," Conway said. "The goal of the committee this session was to take a small step to bring state spending more in line with revenue, and we have done that."

O'Malley, a Democrat who took office in January, slowed the rate of spending growth this year, proposing to increase continuing expenses by 7.8 percent, down from 11.1 percent in Republican Gov. Robert L. Ehrlich Jr.'s final budget. However, expenses would still rise faster than the growth in state revenue, expected to be about 4.3 percent.

In an interview last night on Maryland Public Television, the governor said he is committed to finding systematic solutions to the state's budget problems but that he first wants to familiarize himself with state finances and to bring together legislators around a fix.

"There's not a consensus in both houses around the solution we need to apply," O'Malley said on the MPT program Direct Connection. "If we can develop a consensus more quickly, some things may happen in this session that we may not have foreseen."

O'Malley reiterated that he sees more common ground on the need for funding increases for transportation and that he is "open to that this session." However, he has not endorsed Senate President Thomas V. Mike Miller's proposed 12-cent-a-gallon gasoline tax increase, which would provide money for new roads and mass transit.

The governor said he also intends to pursue efficiencies as he did in Baltimore, where structural deficits "were addressed through a hundred, a thousand things, if you will, that allowed us to turn that deficit around."

Earlier this month, the Board of Public Works approved Budget Secretary T. Eloise Foster's proposal to cut $50 million from the current budget, a figure she arrived at through savings from a hiring freeze, the elimination of over-budgeting for employee health care and reductions to agencies that were not likely to spend all the money they had been allotted.

But those cuts and the Appropriation Committee's proposed reductions would do almost nothing to reduce the $1.3 billion gap between revenues and spending projected for the fiscal year that begins July 1, 2008. Adjustments to the state's balance sheet in the last month and O'Malley's calls for additional spending on corrections and juvenile services will wipe out all but about $1 million of the cuts.

Republicans on the Appropriations Committee said yesterday they think the Democrats who lead the panel didn't do enough to prepare for next year, and they are proposing $800 million in cuts that they say would wipe out the structural deficit without tax or fee increases.

"We don't feel we've done our due diligence in getting ready for this huge deficit we face," said Del. Gail H. Bates, a Howard County Republican who serves on the committee. "If we don't, we're looking ... at a substantial tax increase at the same time we're looking at constituents paying higher energy costs, higher fuel costs when they fill up their cars and higher health care costs."

The House Republicans' proposal would essentially hold spending to the same level as this year, with a few exceptions.

The plan would allow for cost-of-living increases and pension enhancements for state government employees, but it would cut funding increases for new prison guards and for a new juvenile justice facility to replace a privately run one that the state closed down this month. The plan would also cut money designed to freeze tuition at Maryland colleges and universities.

In the Senate, Sen. J. Lowell Stoltzfus, an Eastern Shore Republican who sits on the Budget and Taxation Committee, has proposed cutting about $640 million out of the budget.

The two proposals are the first serious suggestions that the state delay implementing the last phase of the so-called Thornton education funding formula, a plan approved five years ago to ensure students statewide are given an adequate education.

Lawmakers did not enact a funding source for the program, which, when fully phased in, will increase education spending by $1.3 billion, almost exactly the amount of the structural deficit.

Stoltzfus said the situation is desperate enough that Thornton has to be on the table.

"We are either going to have to make cuts or else taxes will be increased," Stoltzfus said.

O'Malley spokesman Steve Kearney said the Republicans' proposals are curious, considering they endorsed Ehrlich's budget increase last year, when the scope of the current problem was already known.

"That's an interesting about-face," he said.

Republicans acknowledged that their proposals have little chance of being enacted by the Democrats, who control the General Assembly.

Del. Susan L.M. Aumann, a Baltimore County Republican who serves on the Appropriations Committee, said O'Malley's desire to hold off on major budget decisions until he has a better grasp of state finances is understandable. But in the meantime, she added, the projected deficit is only getting worse.

"We definitely understand that the governor wanted to take a year," Aumann said. "I think it's a good move, but to then go ahead and increase spending levels while you're waiting, facing a deficit of the magnitude we're facing and not having a concrete plan to deal with it, is a mistake."

andy.green@baltsun.com

POINTS OF VIEW

House Democrats have proposed modest cuts to Gov. Martin O'Malley's $30 billion budget proposal for the fiscal year that begins in July. But Republican delegates want deeper spending reductions in anticipation of a projected $1.3 billion shortfall starting in July 2008. Here are highlights of the two plans:

DEMOCRATS

Identified $148 million in cuts

Proposed trimming spending increases in some departments, such as by reducing the number of new employees in the attorney general's office

REPUBLICANS

Suggested across-the-board cuts ranging from $640 million to $800 million

Proposed cuts that include a delay in implementing the last phase of the landmark Thornton education funding formula and elimination of new corrections officers Source: Maryland General Assembly

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