Gov. Larry Hogan outlined a budget plan Thursday that would cut school aid to Baltimore and state workers' pay but preserve — at least for now — funding for two light rail lines.
The new Republican governor said his budget — with cuts to every state agency and to Medicaid providers statewide — would put Maryland on the road to fiscal health while preserving core programs from onerous reductions.
"Over the last eight years, Maryland families and small businesses were tightening their belts, while state government was doing just the opposite," Hogan said. "That's not right, that's not fair, and that stops today."
Hogan began laying out details of next year's roughly $40 billion state budget 24 hours after taking the oath of office. He said his proposal would eliminate a looming $800 million revenue shortfall next year and close the gap projected for future years.
The governor said he still plans to propose some form of tax cut during the current legislative session, but he offered no specifics.
His full budget will be delivered Friday to the General Assembly, which is certain to propose changes. Some leading lawmakers expressed concern about the provisions released Thursday, especially the more than $200 million in cuts to Medicaid.
"You're going to have the most vulnerable population of Maryland struggling to get health care in this state if we agree to this budget as it currently stands," said Del. Maggie L. McIntosh, the Baltimore Democrat who chairs the House Appropriations Committee. "There's a lot of work to be done on this budget."
Here are some key provisions of Hogan's proposal:
•It would preserve an unspecified amount to keep work going on the Red and Purple lines, light rail projects in the Baltimore and Washington areas, respectively, whose combined $5 billion price tagHogan has questioned. Hogan said his administration is reviewing the projects to determine whether they should go forward.
•State employees, who after years of pay freezes got a 2 percent cost-of-living adjustment in January, would lose that increase as of July 1. In addition, they would not receive a COLA or merit raises next year.
•Among the $143 million in cuts to K-12 education would be a 50 percent reduction in a geographic formula that compensates districts where education costs are higher. For Baltimore, the change would mean a loss of about $11 million. Prince George's and Montgomery counties would see greater cuts.
•Other state education formulas would remain largely intact, and state aid to K-12 schools would rise to a new high of $6.1 billion. But Hogan warned that the politically sensitive formulas need to be re-examined. He proposes spending $290 million for school construction, roughly in line with recent years.
•State agencies would be cut 2 percent across the board, extending a reduction to this year's budget made by Gov. Martin O'Malley before he left office Wednesday. Hogan's budget secretary, David R. Brinkley, said the newly installed agency secretaries would have broad discretion in how to apply those cuts.
•Spending for the University System of Maryland would increase by 1.3 percent. Hogan's staff could not say whether that would prevent another tuition increase on the heels of one some schools imposed midyear as a result of O'Malley administration cuts.
Overall, Hogan administration budget documents show that the general fund budget would increase by 2.4 percent, to $16.4 billion. Revenues are predicted to grow by 3.5 percent.
Voter discontent over taxes helped fuel Hogan's upset win in November, and the governor repeated his promise Thursday that he would look for tax cuts once he gets the state's spending in order.
Legislative reaction varied.
"The cuts weren't as severe as they could have been," said Senate President Thomas V. Mike Miller, a Prince George's County Democrat. "Everything's getting cut to a certain extent."
But House Speaker Michael E. Busch lamented that under Hogan's proposed budget, every county in the state would receive less school funding than expected — from halving the geographic index, cutting some grants and capping how much education funding would grow to offset inflation.
"That's a real cut," the Anne Arundel Democrat said.
Busch said lawmakers would scrutinize Hogan's plan carefully. Under Maryland's Constitution, lawmakers can cut spending and negotiate other changes but cannot add money or shift it around.
Senate Minority Leader J.B. Jennings of Baltimore County predicted that Republican lawmakers would line up solidly behind Hogan's budget plan and would not second-guess his decision not to seek deeper cuts to pay for tax reductions.
"We've got to be realistic here," Jennings said. "In 24 hours he's been able to do something that hasn't been done in 10 years in bringing spending in line with revenue."
Those on the receiving end of the cuts were less supportive.
Jeff Pittman, a spokesman for the union representing the largest number of state employees, said the pay cut would be "deeply disappointing" to members, including the many he said voted for Hogan.
"This is certainly not what Governor Hogan ran on," said Pittman of AFSCME Maryland. "Most state employees will be shocked and angry that is what he did on day one."
Steve Guthrie, president of the Public School Superintendents Association of Maryland, said the budget picture for schools was "mixed."
While relieved that the formulas themselves were unchanged, he expressed concern for the 13 jurisdictionsthat would lose money through the geographic index. Guthrie, who heads the Carroll County school system, said that unless local governments decide to close the gaps, he and his peers will have to consider cuts, including staff reductions.
"Any reduction in staff increases the workload for those that remain," said Guthrie, whose county would lose $1 million under the index plan.
Edie House, a spokeswoman for Baltimore's school system, said officials are just starting to review Hogan's proposal. She noted that two-thirds of the city school system's $1.3 billion budget comes from the state.
Prince George's County Executive Rushern L. Baker III expressed relief that an anticipated $30 million for a new hospital in his county was kept in the budget. But he said the $19 million impact of the geographic index cut there would be a blow atop the $114 million revenue shortfall Prince George's faces next year.
"This will exacerbate the problems. There will not be an answer for making up that gap," Baker said.
Hogan, however, predicted that the budget plan would have a positive effect on Marylanders' lives.
"Hopefully, they'll feel the state is getting back on track, that we're finally getting our fiscal house in order," he said. "Marylanders did not feel very good about what we've been doing. ... The status quo was not acceptable."
Baltimore Sun reporter Timothy B. Wheeler contributed to this article.