Gov. Martin O'Malley met Thursday with senior staffers to decide on hundreds of millions of dollars in budget cuts as the state's largest public-sector employee union called on him to protect vital services and warned about potentially "dangerous" cutbacks.
The administration has been poring over a list of budget cuts suggested by Cabinet secretaries - including a proposal to shutter some correctional facilities that would have saved $36 million but was rejected by O'Malley. The Democratic governor plans to present about $300 million in budget cuts to the Board of Public Works on Wednesday and another $400 million later this year.
"None of it will be popular," O'Malley told reporters after an event in Baltimore. "And all of it will require us all to make sacrifices and understand that we're in this together."
An hour later at another news conference, leaders from the American Federation of State, County and Municipal Employees cautioned O'Malley not to jeopardize public health and safety and at-risk children with draconian budget cuts for correctional facilities, foster care, public health facilities and juvenile services.
The union's warning signals a political minefield for O'Malley. He already has gone through several wrenching rounds of budget cuts, but does so now with an election year looming, potentially setting up conflicts with some of his biggest allies. AFSCME contributed heavily to O'Malley's election in 2006, and donated a half-million dollars to the campaign for legalizing slot machines that he backed.
Patrick Moran, AFSCME's Maryland director, said union members, who in the past have provided get-out-the-vote support, would decide on their political activities in the 2010 election later. But he indicated that how O'Malley navigates the budgetary morass could impact those decisions.
"If they're unhappy, obviously that's going to transfer to the election," Moran said.
AFSCME represents more than 30,000 state workers, and about a dozen stood by Moran holding signs that read "No pay cuts" or "No layoffs" before television cameras. They complained that some agencies are understaffed and that state employees are overworked. They called on O'Malley to heed their priorities when making budget cuts.
Ed Shoemake, a resident adviser with the Department of Juvenile Services, said inadequate staffing levels have made some detention facilities unsafe for workers and surrounding communities. "A lot of my fellow co-workers in our youth centers are made to work nonvoluntary overtime on a daily basis, and our case managers are dealing with overwhelming caseloads," he said.
Rather than cutting critical agencies or programs, Moran suggested the General Assembly resurrect a corporate tax law proposal known as "combined reporting" that's aimed at preventing big companies from hiding profits out of state but that's roundly opposed in the business community. Moran also suggested scrubbing privatization efforts to revert some jobs back to the existing state workforce to save money.
O'Malley declined to detail specific cuts that he's considering but indicated it would be "impossible" to fully preserve budgeted spending for education, health and public safety because those areas comprise such a large part of the budget.
As the economy contracted over the fiscal year that ended in June, the Board of Public Works approved more than $400 million in midyear cuts over several meetings. The panel, which includes O'Malley, Comptroller Peter Franchot and Treasurer Nancy K. Kopp, will consider the latest cuts just three weeks into the new fiscal year.
A state revenue report released Thursday illustrates the problem. Overall, tax receipts and other revenues are down nearly 6 percent to about $12 billion for the last fiscal year, though not all collections have been counted. Most notably, individual income taxes were down and refunds were up, so the revenue stream is expected to come in $300 million below expectations.
Because a fund balance that was supposed to carry forward to help balance this fiscal year has largely disappeared, and because the economy is projected to continue to slide, officials expect about $700 million in budget cuts will be needed.
"The national economic recession is still savaging our state economy and revenues," Franchot said in an online chat about the economy. "We are seeing a record drop in revenues across the board."
Franchot, who was asked by online commentators about the state budget, repeated his call for a top-to-bottom review of spending to identify waste. One commentator named Jose noted: "Money is tight everywhere. How much did it cost to revamp your website?"
Franchot explained that his Web site overhaul was done "in house, with existing staff and resources." He added: "Like families and businesses across Maryland, we are tightening our belts in the Comptroller's office and working creatively to do more with less."