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State sees no local cuts

The Baltimore Sun

SALISBURY -- Gov. Martin O'Malley said yesterday that he would seek not to cut aid to local governments or pass along new costs to county and municipal officials in closing the state's projected $1.5 billion budget gap, saying his experience as Baltimore mayor showed him the futility of that kind of "shell game."

"As a former mayor ... I'm familiar with that game where things get balanced and it all trickles down, and I'll let you all fill in the blank for what that 'it' is," O'Malley told local leaders at a Salisbury American Legion hall where he held a Cabinet meeting yesterday. "It does not make us stronger as a state if we balance the budget at the state level and leave a hole at the municipal government."

O'Malley, speaking to local officials from the lower Eastern Shore yesterday, said he could not guarantee that local governments would be held harmless in a budget deal he works out with legislators. But he urged county and municipal leaders to join a lobbying effort to persuade the General Assembly to accept higher taxes rather than try for a solution based solely on cuts.

The first-year governor made his remarks as he prepared to head to today's gathering of the Maryland Municipal League in Ocean City, where he is expected to face questions from anxious city leaders about the impact of the state's budget woes.

Sen. Richard F. Colburn, an Eastern Shore Republican who attended O'Malley's event yesterday, said the governor's commitment would not be easy to keep.

"He's the one that submits the budget, but there's going to be a big tug of war, and he's going to have to referee the fight," said Colburn, the town manager of Federalsburg in Caroline County.

Passing the buck to local government has been a frequent tactic of previous governors during tough fiscal times - former Gov. William Donald Schaefer foisted significant personnel costs on the counties during an early 1990s budget crunch, and former Gov. Robert L. Ehrlich Jr. withheld some local aid. Those moves often resulted in higher local taxes, such as on property and income.

Local officials had begun to get nervous about what costs they might be asked to shoulder under another round of state budget-balancing and about whether O'Malley, who railed against previous governors for addressing fiscal problems in that way, would change his views now that he's in Annapolis.

"The governor made the same promise during his campaign, and it's good to hear him repeat it," said Harford County Executive David R. Craig, a Republican. "O'Malley comes from local government and understands there are not a whole lot of places where we can make cuts."

Anne Arundel County Executive John R. Leopold, a Republican and former state delegate, called the governor's comments "welcome news."

Because of the size of the state budget shortfall, Leopold's advisers have been bracing for cuts in state aid of as much as 25 percent in 2008, and he began making preparations with his budget for the fiscal year that begins Sunday, such as cutting grants to nonprofit organizations by half, to $2.5 million. He has warned nonprofits that there might be less money next year after the state balances the books.

Leopold said he hoped that under any state spending plan O'Malley won't shift the burden of funding teachers' retirement from the state to the counties. Leopold said he also hopes that state funding sources will remain intact to build roads, preserve open space and improve waterways.

"When the governor said that he won't balance the budget on the backs of local government, I hope that won't include any of those funds," Leopold said.

Salisbury Mayor Barrie Tilghman said her community is already stretched thin with commitments to public safety, education and other expenses. The city raised taxes last year and would have a hard time doing so again, she said, making O'Malley's commitment all the more important.

"It's a real blessing for us to have a mayor in the governor's office," said Tilghman, a Democrat. "Over the last four years, we've had money taken out of our highway user funds, Program Open Space, and those are funds we depend on. It's very reassuring having worked with the governor as mayor-to-mayor. He comprehends the challenges we are facing on the ground here in the trenches."

But crafting a fiscal plan that avoids cuts to local government could prove easier said than done. O'Malley has begun efforts to streamline state government operations, forcing his cabinet secretaries to propose a total $200 million in cuts. Making up the rest of the expected gap between spending and revenues will require lawmakers to reconcile long-standing debates over taxes and slot machine gambling.

O'Malley alluded to that difficulty yesterday, saying he could only speak for the executive branch of government, not the House of Delegates or state Senate.

The governor also hinted at some of the underpinnings of his strategy for forging a budget compromise. He said the public and members of the legislature need to know what the consequences will be of cutting spending enough to balance the budget without raising taxes or generating other new revenues.

"The big debate raging in our country is whether we want to be the first generation of Americans to pass on our country weaker to our children instead of stronger," O'Malley said. "There's three basic choices here. We can either try to privatize all the public infrastructure in our country and hope corporate America, out of noblesse oblige and largess, allows us to pay less for them than we do now, we can let them crumble, or we can invest."

Sun reporters Phillip McGowan and Mary Gail Hare contributed to this article.

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