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Hogan unveils budget with continued 2 percent cuts to agencies

Hogan unveils budget with continued 2 percent cuts to agencies
Larry Hogan was sworn in publicly as governor today in front of the State House amid heavy snow flurries. (Amy Davis, Baltimore Sun)

Gov. Larry Hogan proposed sustained state funding for K-12 education but an across-the-board cut to state agencies in his much-anticipated spending plan released Thursday.

Maryland's new Republican governor said his budget cuts - which affect Medicaid rates for doctors and every state department - will help "redirect our state's fiscal course" and end an era of spending beyond the state's means.

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"Over the last eight years, Maryland families and small businesses were tightening their belts, while state government was doing just the opposite," Hogan told reporters in his first press conference since taking office Wednesday. "That's not right, that's not fair, and that stops today."

Hogan's 2 percent cut to every state agency continues budget measures taken by then-Gov. Martin O'Malley earlier this month to close a projected shortfall. The precise impacts of the cuts are unclear; Hogan's budget secretary David Brinkley said the newly installed agency secretaries will have broad discretion in how to apply those cuts.

The new governor also increased spending for higher education for the University of Maryland system by 1.3 percent, though Hogan's staff could not say whether that would prevent another tuition increase. Some schools recently enacted a mid-year tuitition hike after O'Malley trimmed its budget.

Overall, Hogan said general fund spending would increase by .5 percent.

Two controversial transportation projects - the Red Line in Baltimore and the Purple Line in the Washington suburbs - survived the chopping block, but Hogan said he was still deciding whether to move forward with them.

The budget plan contains no layoffs or furloughs for state workers, Hogan said, nor specific tax cuts.

His full budget proposal will be presented Friday to the General Assembly, where legislators can seek to  shift spending but not increase it.

Voter discontent over taxes helped fuel Hogan's upset win in November, and the governor Thursday repeated his promise that he would look for tax cuts once he gets the state's spending in order. He has said he will offer some form of tax relief during the current legislative session, but declined to offer specifics.

Legislative leaders said Hogan's spending plan will leave many advocates unhappy but keeps key spending priorities in tact.

Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch, both Democrats, emerged from a briefing on Hogan's budget Thursday to say Hogan balanced Maryland's without deep cuts to education.

"Everything's getting cut to a certain extent," Miller said. "The cuts weren't as severe as they could have been."

Miller said he expected Medicaid advocates and some larger juridisdictions to be unhappy.

"There are lot of issues that we have concerns with," Busch said, adding that state employees and health care took hits.  He said to "count on" the General Assembly to scour Hogan's plan.

Hogan halved an education funding formula that gives some jurisdictions extra cash to offset the higher cost of education there. Baltimore City received nearly $23 million through that formula under O'Malley's last budget.   Overall, however, Hogan's plan spends a record $6.1 billion on K-12 spending using a broad formula contained in state law.

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The state's capital spending plan contains $290 million for school construction.

Hogan has said "strong medicine" was needed to solve Maryland's shortfall, which stood at an estimated $750 million gap for the year that beings July 1.

The newly inaugurated Republican governor invited top legislative and fiscal leaders to the governor's mansion Thursday for an 11 a.m. briefing on his spending plan.

"Everyone is going to feel some pain, that's my sneak preview," said House Minority Whip Kathy Szeliga, a Republican from Perry Hall.

House Appropriations Committee Chairwoman Maggie McIntosh, who has criticized Hogan's budget rhetoric as overblown, said she hoped to see a plan that cut the budget "in a way that's fair and protects our priorities."

McIntosh, a Baltimore City Democrat, said the House of Delegates values K-12 education, access to health care and enviornmental agencies,  which she said had already suffered severe cuts.

The state budget is about about $39 billion total, of which about $16 billion pool represents most state tax dollars. Spending is largely decided by formulas that are spelled out in law. Less than 20 percent of state spending is considered discretionary, and any major cuts to funding formulas would require approval of the Democratic-controlled legislature.

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