O'Malley to urge more funds for states

The Baltimore Sun

Gov. Martin O'Malley plans to implore the state's congressional delegation today to craft a federal stimulus package with more money for states.

The governor travels to Washington the day after the Senate approved a two-year stimulus bill that would direct $3.3 billion to Maryland, which is $953 million less than the House version. According to documents reviewed by state lawmakers, the Senate plan doesn't include money for school construction, low-income heating assistance or pandemic flu preparation.

The Senate bill also omits $450 million Maryland could use for "fiscal stabilization," discretionary money coveted by state officials because they would have the flexibility to use those dollars to plug a $2 billion budget shortfall for the next fiscal year.

"It's a huge hit," O'Malley said, adding that he hoped House and Senate negotiators craft a final bill with a higher amount of state aid.

"Even if the worse we do is the Senate version, it is so much more help than we have received in eight long years from our federal government," O'Malley said.

To present a balanced budget to the General Assembly, O'Malley assumed Maryland would receive $350 million in federal funds for the state's operating budget in the first year of the plan.

But the federal package is shaping up to be larger, and the governor has said that he's hoping to use the money to avoid more than $50 million in midyear cuts as well as layoffs of 700 state employees.

One wrinkle is that some of the money comes with strings attached, which could complicate how the state spends it. For instance, under a formula being considered to help states' overall education budgets, Maryland would be forced to direct that money only to schools with a high percentage of poor students, mostly in Baltimore and Prince George's County.

Meanwhile, Republican lawmakers in Annapolis cautioned the administration and Democratic-controlled legislature against using federal money to start new spending programs that would lack a funding source once the money from Washington dries up. The GOP caucuses also proposed a "Taxpayers Protection Act" that would require a three-fifths vote in each chamber to pass any tax increases.

Using federal money to fuel new spending would have "long-term negative consequences on Maryland's budget," House Minority Leader Anthony O'Donnell said.

Meanwhile, the state's fiscal problems are expected to get worse. Warren Deschenaux, the legislature's chief fiscal analyst, warned yesterday about a further decline in state revenues likely to be reflected in a March report. "Things are still bad, and they're getting worse," he said.

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