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Hogan defers some cuts to state budget, but board approves $413 million in reductions due to coronavirus economic crisis

Treasurer Nancy Kopp, Maryland Gov. Larry Hogan and State Comptroller Peter Franchot listen to testimony at a state Board of Public Works meeting in 2019 in Annapolis.
Treasurer Nancy Kopp, Maryland Gov. Larry Hogan and State Comptroller Peter Franchot listen to testimony at a state Board of Public Works meeting in 2019 in Annapolis. (Barbara Haddock Taylor / The Baltimore Sun)

The state Board of Public Works approved $413 million in state budget cuts Wednesday that Gov. Larry Hogan said were necessary because of the economic crisis — and the governor signaled more cuts may be needed.

Hogan said his administration was deferring more than $200 million in additional cuts that his budget department had proposed.

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The Republican governor proposed last week cutting $672 million from the state budget, reductions he said were painful but necessary because of the toll the coronavirus pandemic has taken on Maryland’s economy.

On Wednesday — before the cuts were to be voted on during an online meeting of the Board of Public Works — Hogan said the reductions had been revised and now amounted to $413 million. The cuts remaining intact ranged from $323,000 to a Baltimore City violence prevention program and $1.6 million to the Baltimore Symphony Orchestra, to more than $131.5 million for higher education.

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Hogan said the revisions were made “so we can have a further discussion.” He cautioned that the board needed to find alternative cuts or else the state may need to lay off more than 3,100 workers.

The change in the proposed reductions came after Treasurer Nancy Kopp joined fellow Democrat and State Comptroller Peter Franchot to oppose a portion of the cuts. Hogan, Kopp and Franchot each have one vote on the Board of Public Works.

State Senate President Bill Ferguson credited Kopp and Franchot with having “mitigated the worst of these cuts.”

“Unless the federal government takes action, what we saw today is a forecast of things to come,” Ferguson said. “The COVID-19 crisis has wreaked havoc on state budgets throughout the country, and we will face more cuts without help.”

An economic relief package from Washington in late March established a $150 billion fund for state, territorial, tribal and local governments. Maryland’s share was about $2.3 billion. Many state and local officials say a new aid package is necessary to mitigate job losses or furloughs.

Franchot had said Tuesday that he planned to reject more than $205 million of Hogan’s proposed cuts, including the elimination of a cost-of-living increase for state employees and reductions in the state’s contributions to workers’ health insurance and retirement plans.

Also spared were tens of millions of dollars in aid to public school programs and teacher retirement contributions.

“The rejection of Gov. Hogan’s attempt to defund our public schools during the middle of a pandemic is a win — but it’s incredibly disappointing that the governor tried this in the first place,” said Maryland State Education Association President Cheryl Bost, a Baltimore County elementary school teacher.

Kopp urged the state “to wait until the 2020 revenues are in, two weeks from now, and look at these cuts and at the total picture of the federal money, the reserves, and use the time to educate people.”

Because of the pandemic, the state income tax filing deadline was postponed from April 15 to July 15. The next meeting of the Board of Public Works is scheduled for July 22.

The union representing the largest number of state employees applauded Kopp and Franchot for their “thoughtfulness about the needs” of Marylanders.

“We agree with Comptroller Franchot and Treasurer Kopp that Maryland needs to get a better handle on its finances with hard numbers,” said a statement from Maryland Council 3 of the American Federation of State, County and Municipal Employees.

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Hogan and Franchot voted to approve the remaining $413 million in cuts, and Kopp voted against them.

Kopp expressed concern about a number of specific reductions.

“I would urge that you not do the cut, at least in its entirety, of the Baltimore Symphony Orchestra, for instance,” she said. “The symphony is important to the culture of the state.”

The BSO is attempting to turn itself around from the dire financial straits in which it found itself in 2019.

The higher education cuts included $117.3 million to the University System of Maryland, $8.9 million to Morgan State University and $3.2 million to Baltimore City Community College.

Hogan said that while the overall $413 million in reductions were difficult, the consequence of “not taking action is much more severe.” Last week Hogan proposed that the state reduce spending for the fiscal year that began Wednesday by $1.45 billion, including the cuts the board considered Wednesday.

“Failing to make painful cuts now would cause a hatchet to be used on our state budget, instead of the skillful use of a scalpel, which I believe the state’s budget department team has proposed today,” the governor said during the meeting.

Without the board’s action Wednesday, the state would have needed to lay off more than 6,350 employees, Hogan said. He said the $205 million in deferred cuts “are the equivalent of 3,157 more jobs that will need to be eliminated” unless the state comes up with alternatives.

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