House budget writers identified yesterday nearly $500 million in potential savings in next year's budget, including recommendations to freeze inflation increases in the state's Thornton education funding plan, eliminate vacant state jobs and tap surplus funds in the state health insurance fund.
"We're at a point where some very, very tough decisions have to be made," said Norman H. Conway, chairman of the House Appropriations Committee, before the committee approved the bill to reduce spending by $498 million in the fiscal year 2009 budget.
The full House of Delegates takes up the proposed cuts today as part of the General Assembly's special session to close a $1.7 billion budget gap for the next fiscal year.
The committee agreed yesterday to reduce inflation increases under the Thornton education plan, a move that is expected to save $150 million.
Also, the panel tapped surplus funds in a health insurance fund for state employees and retirees, taking $77 million. Sue Esty, a spokeswoman for the American Federation of State, County, and Municipal Employees, said the move amounts to raiding extra monies that accumulated because workers overpaid for their health care.
Legislators did decide to give workers a holiday from paying their share of the insurance plan for one pay period.
The committee softened another proposal to eliminate 1,000 vacant state jobs, deciding instead to eliminate 750 positions for a savings of $15 million.
Delegates rejected a controversial amendment that would have eliminated a 2 percent cost-of-living increase to salaries for state employees.
The move would have saved the state about $62 million. They also urged Democratic Gov. Martin O'Malley to make an additional $179 million in spending reductions in next year's budget.
After limited debate, the committee voted to reduce commissions to lottery agents from 5.5 percent to 5 percent, which would increase revenue to the general fund by $8.6 million.
Del. Tawanna P. Gaines, a Prince George's County Democrat, added a provision to the bill saying the General Assembly would review the amount of commissions paid to lottery agents if voters legalize slot-machine gambling next year.
The goal would be to determine whether lottery agents should be paid higher commissions because of lost revenue, Gaines said.
The committee also approved a $10.3 million spending reduction by saying funding should not be increased for the Heritage Structure Rehabilitation Tax Credit program.
The Maryland Historical Trust provides tax credits equal to 20 percent of the bricks-and-mortar cost of rehabilitating historic structures.
The closest vote on the spending reductions was 19-7, as the committee chose to save $6.7 million by deferring changes to the formula that would have increased funding to community colleges.
"We're running out of space in community colleges," said Del. Charles E. Barkley, a Montgomery County Democrat. "This is a big step backwards."
House Speaker Michael E. Busch, a Democrat, had directed budget writers to identify $500 million in cuts from next year's projected budget.
Republicans have criticized O'Malley for failing to significantly cut spending while proposing a range of tax increases. Lawmakers also are working on a package of $1.4 billion in tax increases.
Del. Steve Schuh, an Anne Arundel County Republican, said that while he supported the final bill in committee, he would like to have seen spending curtailed even more.
He also criticized the deficit-reduction plan being crafted by Democrats because it would raise a variety of taxes and relies on revenue from legalized slot-machine gambling that wouldn't kick in for several years. The slots proposal would be put to voters in a November 2008 referendum if the legislation passes.
"If you blow it on spending restraint and if you blow it on slots, you're backed into a fiscal corner of having to raise taxes in a very big way to balance the budget," Schuh said.
But other Republican legislators yesterday balked at some of the small spending reductions.
Del. Susan L.M. Aumann, a Baltimore County Republican, opposed a measure to keep grants to private colleges at the current fiscal year amount, which would save the state $3.4 million. She expressed concern that more students will leave Maryland to attend private colleges.
"I'm glad to hear you agonize," replied Del. John L. Bohanan Jr., a St. Mary's County Democrat, who added that the legislature is trying to slow the rate of growth in spending to match revenue. "We're just trying to live within our means."
Four subcommittees of the Appropriations Committee had a choice of $339.8 million in spending reductions crafted by the Department of Legislative Services.
The subcommittees rejected proposals to close the Walter P. Carter Community Mental Health Center in Baltimore, delay plans to replace the state's Diebold voting machines with new equipment that creates a paper record, defer inflationary increases to local health department grants and share the increase in retirement costs of teachers, librarians, and community college employees with local governments.
"This is not easy," said Conway. "There are always items in the budget that we worked hard for. When you start reducing them, that goes contrary to what we do here. No one asks me to cut anything."
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Today in Annapolis
The House of Delegates is scheduled to meet at 11 a.m. today to consider budget cuts.
House leaders have said they want to trim $500 million from the budget to help resolve next year's expected shortfall, but efforts to reduce spending have proved controversial.
Later in the day, the House Ways and Means Committee is slated to consider changes to the Senate's slot machine gambling bill.
The full House could consider a version of the plan to put a gambling referendum on the November 2008 ballot as early as tomorrow.
The Senate is not scheduled to meet until Thursday.
Selected cuts
The House Appropriations Committee voted on a variety of spending reductions to help address Maryland's $1.7 billion structural deficit. The full House could vote on them today. Here is a look at some of the reductions.
$150 million in reductions by cutting back slightly on plans to compensate schools for inflation under the Thornton education reform law.
$77 million from extra money in the Health Insurance Fund balance.
$15 million by eliminating 750 vacant state jobs, leaving funds to support about 415 of them if the state decides to bring them back.
$3 million reduction in enhancement funding for the University System of Maryland.
$6.7 million deferment of spending to the community college formula by holding the Cade formula at the fiscal 2008 level of 25.5 percent and Baltimore City Community College at 6.6 percent.
$8 million in savings by maintaining current funding of the Maryland Infant and Toddlers Program.
$3 million reduction in stem-cell research grants.
$7.8 million savings by setting up a state-local cost share at 75 percent and 25 percent for special-education nonpublic placements.
$8.6 million by reducing commission to lottery agents from 5.5 percent to 5 percent.
$10.3 million by funding the Heritage Structure Rehabilitation Tax Credit at the fiscal 2008 level of $14.7 million, instead of baseline forecast of $25 million.
[Associated Press]