Gov. Larry Hogan is considering layoffs and pay cuts for state employees as a way of balancing a state budget that’s been hit by slow tax collections due to the coronavirus pandemic.
Hogan could propose a series of budget cuts, potentially affecting the state’s more than 100,000 employees, as early as Friday.
According to the Maryland Professional Employees Council, the state forwarded its “FY21 Budget Balancing” ideas June 17 to the union. The union’s response to the state, obtained by The Baltimore Sun, outlined several measures it said the state suggested could take effect July 1:
- Laying off an unspecified number of people.
- Cutting salaries by 5%.
- Eliminating all previously negotiated salary increases and cost-of-living adjustments.
- Adjusting rules to limit when workers qualify for overtime pay.
Additionally, the workers could see the cost of health insurance go up in January if the state stopped using extra money in an employee health insurance fund to reduce the amount workers pay in premiums.
Hogan spokesman Mike Ricci said Thursday he could not comment because labor negotiations are confidential. But he noted that the coronavirus pandemic has caused “a dire and unprecedented fiscal crisis” for state governments.
Hogan, in an online discussion Thursday with the American Hotel & Lodging Association, said governors were recently briefed by experts and told to expect a 30% drop in revenues.
“Many of my colleagues are talking about tens of thousands of workers being let go,” the Republican governor said. “You don’t think of the government as a business, but when your revenues are down, our revenues are down.”
The Maryland Professional Employees Council, which represents about 5,000 state workers and is an affiliate of the American Federation of Teachers, wrote the Hogan administration to oppose the cuts as “draconian.”
Already, council members haven’t received step increases since 2016 and annual cost-of-living adjustments have been small, union president Jerry Smith wrote Tuesday to Cynthia Kollner, the state’s top personnel official.
“Our members’ ability to sacrifice their families’ well-being to assist the state in its budget management is not without end,” he wrote in outlining his responses to the state’s ideas, which Kollner had requested within a week.
Other officials with the Hogan administration also declined to comment on what steps it might take to cut the budget. Nick Pepersack, deputy chief of staff and spokesman for the Department of Budget and Management, would only say Monday that any “budget adjustments” would go to the state’s Board of Public Works for approval. He did not respond Thursday to a request for further comment.
The Board of Public Works is a three-member panel that approves state contracts and oversees certain financial matters. The board is comprised of the Republican governor, Democratic Comptroller Peter Franchot and Democratic Treasurer Nancy Kopp.
The board’s next meeting is Wednesday, and there’s a deadline of Friday for putting items on the agenda. As a result, the leader of the union that represents the largest number of state workers, AFSCME Maryland Council 3 President Patrick Moran, said he believes the budget cuts could be proposed Friday.
The board can make budget cuts at any time, although the new budget year starts Wednesday.
“They are asking people to take huge cuts in the face of a pandemic and work with less than they already have, which is minimal at best,” Moran said.
AFSCME, the American Federation of State, County and Municipal Employees, didn’t receive the state’s written proposal, but Moran said leaders of other state workers’ unions had and shared it with him.
Maryland Professional Employees Council, AFSCME and six other unions represent about 30,000 of the state’s more than 105,000 workers.
Multiple unions are planning a car caravan and rally Tuesday evening in Annapolis, on the eve of the next Board of Public Works meeting, to show their opposition to cuts.
Moran said it’s “absolutely devastating to the people of Maryland” to cut state workers’ jobs and pay as demands on state services, such as unemployment benefits and food stamps, increase.
Jason Suggs has been working a stressful job during the pandemic: He is a claims associate for unemployment at the state Department of Labor in Prince George’s County. He said the job requires a bachelor’s degree and pays only about $35,000 per year to start. Pay cuts may drive people out of the profession, he said.
“It’s hard to find people who are qualified who would want to take this job for the pay when you look at the amount of stress,” said Suggs, who is president of an AFSCME local chapter.
Union leaders say they need more time to discuss the proposals with state budget officials. And they want more and updated information about the state’s financial picture.
It’s clear that the state’s finances will take a hit due to the pandemic. People are paying less in income taxes because they’re out of work or have been furloughed. They’re also paying less in sales taxes, either because of financial difficulties or because all but essential business was shut down for weeks. The state’s general fund gets 45% of its money from income tax withholding and 25% from the sales tax.
Tax-collection deadlines have been pushed back, including the deadline for filing state income taxes, from April 15 to July 15. So, the state won’t know how much money it has in the bank until then.
Revenue predictions have been inconsistent. A state forecast in April showed potential losses of $2.8 billion by the end of June. By mid-May, the forecast was revised to about a $1 billion loss by the end of June, with a potential hit of $2.5 billion to $4 billion over the next two years.
Maryland Policy & Politics
The financial forecast is clouded by uncertainty over whether there will be more federal aid sent to states, whether a second wave of the coronavirus will cause new closures and how quickly consumer spending and employment bounce back.
Hogan and other governors are pushing Congress to pass a financial aid bill that would send money to help state governments plug their budget holes. If that money comes through, Moran reasons, then pay cuts and layoffs might not be necessary.
“The governor’s going out touting, ‘We need the CARES Act.’ But then he’s turning around saying, ‘We need to cut everyone in the state,’” Moran said.
Moran thinks the state should hold off on drastic measures. There are still too many questions about the state’s financial condition and potential economic recovery, he said.
Smith offered possible temporary alternatives, such as furloughs, to help the state save money for what he considers a temporary financial problem.
Norah Stephanos, a social worker in Baltimore County who is active in AFSCME, worries about colleagues getting laid off or quitting or retiring, as a result of cuts. She manages the cases of 19 teenagers in foster care. If co-workers leave, her caseload will grow, making it difficult to give each child enough attention.
“When caseload sizes are high, people get really burnt out really easily. It’s a really difficult job,” Stephanos said. “Cutting funding to an already-strained system doesn’t seem like a good thing for clients.”