Amid a gloomy economy that has severely eroded tax collections, Gov. Martin O'Malley is considering steep cuts to public education and health care programs and might ask state employees to take a six-day unpaid leave.
The spending reductions under consideration total $397 million in a state general fund budget of $14 billion, according to a memo obtained yesterday by The Baltimore Sun. Budget Secretary T. Eloise Foster, who compiled the list, said in the memo that the cuts "will certainly impact services and programs," compared with previous budget-cutting that eliminated "non-contentious items."
The governor learned last month that the state faces a $432 million revenue shortfall that could rise to nearly $1 billion in the next fiscal year. It is a dilemma facing many states, as the foreclosure crisis and credit crunch shrinks the U.S. economy and ripples across the globe.
O'Malley needs to cut only about $250 million immediately, because he can tap into a relatively small pool of surplus funds. But he said he might make more trims as the economy continues to slide.
"Until we see some signs of rebound on the horizon, this is going to be a constant exercise in cutting," O'Malley, a Democrat, said yesterday. "So much of this depends on the economy."
The potential cuts under consideration affect more than a dozen state agencies and nearly every aspect of state government. Public safety, education and health care make up about 80 percent of the budget, and none is expected to be immune from the cuts.
Among the larger proposed reductions is $38 million from an education funding plan designed to provide extra money for school districts where the cost of education is higher; and $26 million to health care providers such as nursing homes and community health clinics. A mandatory furlough for all state employees could save as much as $48 million.
Other proposed budget cuts are more targeted. A proposed state police trooper hiring freeze could save $4.5 million, and the elimination of about 300 vacant positions for correctional officers and parole and probation agents could save $4.2 million.
Susan O'Brien, a spokeswoman for Maryland Families for Stem Cell Research, said a proposed $4 million stem-cell research reduction means Maryland risks "losing researchers and scientists to other states who are funding at higher levels."
But with $15 million left if the cut is made - the same amount as in the 2007 budget year, "Maryland still has a good program, and there's still money going out the door," she said.
Some programs could be eliminated entirely. One proposal withdraws $75,000 from Destination ImagiNation, a program in which students compete in brainstorming challenges involving such subjects as science, theater and leadership.
Many local government officials said they already have girded for reductions in state aid. "We knew there would be cuts. This is probably just the first round," said Anne Arundel County Budget Director John Hammond.
"It has been and will be a significant impact on our budget if this cut becomes real," said Sydney L. Cousin, superintendent of Howard County public schools. "This would have an obvious negative impact on our operations. It's not good news."
Higher education also could see less state help. Among the contemplated cuts is an $8.4 million reduction in state support for Maryland private colleges and $1.8 million less in state-sponsored scholarships and financial aid awards for needy students.
Tuition freeze would stay
Still, officials said they expect to continue a tuition freeze at the University System of Maryland despite potential cuts to its budget - $10 million reduction in operating funds and a $20 million raid on the system's bond fund. O'Malley has made maintaining a cap on college tuition a priority.
As for furloughs of state employees, O'Malley said yesterday that he would not pursue the proposal before speaking with groups that would be affected. But he said the sooner such a step is taken, the more flexibility workers would have for taking time off before the June 30 end of the budget year. Prince George's and Montgomery counties have also explored furloughs to help close their budget shortfalls.
With reports showing unemployment rising in Maryland, some lawmakers said furloughs would be preferable to layoffs.
"When people become unemployed, that is just a greater stress on the economy," said House Speaker Michael E. Busch, an Anne Arundel County Democrat. "There are going to be some significant cuts, and hopefully we'll be able to protect a lot of our priorities."
Patrick Moran, Maryland director of the American Federation of State, County and Municipal Employees, said he would seek a meeting with the administration to ensure that essential services aren't hampered. He suggested having state employees do some of the work that's now done by private contractors to save money.
Final list due Wednesday
The governor plans to present a final list of proposed cuts to the Board of Public Works on Wednesday. He said yesterday that further reductions could be made, perhaps in December, before he presents his next budget in January.
House minority leader Del. Anthony J. O'Donnell said the budget needs to be pared but argued that O'Malley should have predicted and been better prepared for the economic downturn. O'Donnell and other Republicans are calling for a statewide spending freeze.
"Unfortunately, the governor is responsible for creating the problem," said O'Donnell, of St. Mary's and Calvert counties, "through irresponsible spending increases on the heels of historic tax increases at a time when the economy was turning south."
O'Malley spokesman Rick Abbruzzese dismissed the minority leader's criticism. "Did Tony O'Donnell predict the banking crisis? Did he predict Lehman Bros. would file for bankruptcy? Did he predict the federal government would have to step in with a $700 billion bailout for Wall Street ... while a Republican president was at the helm of our national government?"
The governor has grappled with a budget morass since last fall, when he pushed a budget-balancing package through the General Assembly that raised taxes by $1.3 billion and forwarded to voters a plan to legalize slot machines in the state. He is now asking voters to approve that plan in a November referendum so that slots proceeds could be used to close budget gaps in future years.
Senate President Thomas V. Mike Miller Jr. said O'Malley's "painful" budget cuts would have the backing of the Democratic majority in the General Assembly.
"We're in the middle of a national crisis and it has negative effects on our state revenues, and my fellow legislators are going to understand the necessity of taking these cuts now," Miller said. "Quite frankly, I would support making much greater cuts. ... My impression is the economy is not going to get better but instead is going to get worse."
Sun reporters Chris Guy and John-John Williams IV contributed to this article.
HIGHLIGHTS OF THE POTENTIAL CUTS
* Six-day unpaid leave for state employees: $48 million
* Reduction in K-12 education premium for high-cost areas: $37.9 million
* Reduce grant to and reclaim surplus from University System of Maryland: $30 million
* Freeze funding for community colleges: $16.3 million
* 25 percent cut for local jails: $6 million
* Freeze child care subsidies for working poor (2,500 fewer children): $5.3 million
* 25 percent cut in monthly temporary disability assistance: $4.6 million
* State police trooper hiring freeze: $4.5 million
* 1 percent cut in community mental health services: $3.6 million
* Eliminate 283 vacant correctional officer positions: $2.9 million