Maryland Gov. Martin O'Malley presents his budget for fiscal 2014.
Maryland Gov. Martin O'Malley presents his budget for fiscal 2014. (Baltimore Sun photo by Barbara Haddock Taylor)

Gov. Martin O'Malley released a $37 billion spending plan Wednesday that for the first time in recent years contains no drastic cuts or proposed tax increases.

Amid a stronger economy, O'Malley also proposed to boost the pay for state workers, expand tax credits for some high-tech industries and set aside more money to clean up the Chesapeake Bay.


"These have been challenging years to say the least," O'Malley said.

Since the onset of the recession, the state has raised income taxes for the wealthy, increased taxes on alcohol and cigars, expanded gambling, shrunk the state workforce and cut projected spending, among other moves, to close a structural budget gap that once stood at nearly $2 billion. O'Malley said the new spending plan, which must be approved by the General Assembly and is 3.3 percent larger than last year's, is "on the verge" of eliminating the gap.

The budget proposal includes 3 percent raises for state workers who in years past faced furloughs, and money for a study on the impact of drilling for natural gas, including the process known as "fracking." It calls for at least $46 million in tax credits, including a new credit to encourage the cybersecurity industry, expanded credits for biotech and $25 million to lure filmmakers to Maryland.

College tuition would go up by 3 percent, as it has for the past three years. The most controversial financial issue of the Assembly session, however, is absent from the budget proposal. State lawmakers will consider separately how to raise roughly $700 million that O'Malley says is needed to fund transportation projects.

The plan would allocate a record $6 billion for education, and the governor emphasized that the companion $3.7 billon capital budget for construction projects would support more than 40,000 jobs. In the wake of the Newtown, Conn. shooting in which 20 schoolchildren and six adults were killed, O'Malley included $25 million to help Maryland schools upgrade security systems with features such as shatterproof glass and automatically locking doors. The money is part of $336 million in the capital budget for school construction projects, including $25 million to upgrade aging air-conditioning systems.

Compared with previous years — when the governor proposed to trim spending by up to $1.4 billion and pushed controversial proposals and tax increases to help close the budget gap — key decision-makers said O'Malley's fiscal 2014 budget does not contain ideas destined to cause friction.

"There's an opportunity for everyone to take a deep breath after we made all these tough decisions," said House Speaker Michael E. Busch, an Anne Arundel County Democrat.

Lawmakers and analysts will spend the next few weeks poring over the more than 2,000 pages of O'Malley's proposal. Hearings on the plan, for the fiscal year that begins July 1, begin next week.

Local governments that in past years were squeezed by cuts in state aid were relieved that the budget reflects what appears to be the end of recession-driven problems.

"The biggest news for us is that there's nothing in here that's going to require another round of belt-tightening," said Michael Sanderson, executive director of the Maryland Association of Counties.

Fellow Democrats largely praised the governor's budget. But some Republicans contended that as the state emerges from the economic downturn with higher taxes and fewer expenses, any spending increase over last year should be returned to taxpayers.

"That $1.7 billion is being taken out of the Maryland economy to fund government operations," said Senate Minority Whip Edward Reilly, an Anne Arundel County Republican.

House Minority Leader Anthony J. O'Donnell, a Calvert County Republican, added, "We're spending too much money."

However, Senate President Thomas V. Mike Miller, a Prince George's County Democrat, called the plan "a very well thought out, a very balanced budget. ... It keeps spending down; that's the big news."


The budget proposal includes the first significant increase in spending for public higher education in more than a decade, said Patrick "P.J." Hogan, a vice chancellor of the University System of Maryland.

O'Malley would allocate $32 million to the state university system to increase enrollment in science and technology programs, fund collaborations between the flagship College Park campus and University of Maryland, Baltimore, and boost online courses, Hogan said.

The added $11.6 million in funding for science, technology, engineering and math programs would enable the system to admit 740 new students to those majors, which require costly equipment for student use.

"Those are the degrees our economy needs — more engineers, more cybersecurity experts," Hogan said.

In addition to funding the 3 percent pay raise for state employees that his administration previously negotiated, O'Malley called for none of the furlough or "service reduction" days that have cut workers' pay in recent years.

"It's wonderful," said Sue Esty, legislative director of the union AFSCME Maryland. "Our state employees will be very pleased to be headed in the upward direction now."

O'Malley included $31.5 million for the Chesapeake Bay Trust Fund used for bay cleanup — $6.6 million more than last year — plus $36 million to help with environmental projects such as controlling stormwater, which can carry pollutants into the bay.

The governor would add $153 million to the state's rainy day fund — bringing it to $921 million — in case what he called "the hara-kiri Congress" fails to find a financial compromise that averts deep federal spending cuts. His administration estimated that without a compromise in Washington, Maryland could face as much as a $425 million loss.

Baltimore Sun reporter Julie Scharper contributed to this article.