Gov. Larry Hogan’s proposal to cut $672 million from the upcoming state budget because of the economic crisis is imperiled because his two fellow members on the state Board of Public Works say they will reject a large chunk of the plan when the panel meets Wednesday.
State Treasurer Nancy Kopp joined fellow Democrat and State Comptroller Peter Franchot to oppose a portion of the budget cuts proposed by the Republican governor, who said they are needed now because of the dire economic consequences of the coronavirus pandemic.
The proposed cuts include state employees’ raises, vacant positions and funding for programs ranging from school security to prosecuting violent crime in Baltimore.
Franchot 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.
Kopp, meanwhile, believes the board should not act before July 15, when the revenue for fiscal year 2020 is in “and we have good numbers from which to work,” said Kopp’s spokeswoman, Megan Schutz.
The governor proposed a $1.45 billion reduction in state spending for the next fiscal year to mitigate the effects of the virus. That includes $672 million in cuts Hogan put on the agenda for Wednesday’s meeting of the Board of Public Works.
Maryland and other state governments across the country have lost a significant portion of their projected revenue due to stay-at-home orders and other restrictions. Particularly hard hit are income tax withholding from people working in the state and sales tax revenues. Each contributes heavily to the general fund. The general fund, which consists of revenues not dedicated by law for a specific program, amounts to $19.5 billion and is part of an overall budget of $47.9 billion.
Hogan is scheduled return to his seat as chair for Wednesday’s online meeting. Since March 18, Republican Lt. Gov. Boyd Rutherford had led the biweekly meetings so Hogan could concentrate on the state’s response to COVID-19.
The proposed cuts include those to about 20 programs that “Comptroller Franchot simply cannot support at this time,” spokeswoman Susan O’Brien said in an email.
O’Brien provided a list of items Franchot will vote to reject, including: the elimination of $7.6 million for the cost-of-living increase for state workers; the elimination of a $75 million contribution to workers’ supplemental retirement funds; nearly $33 million in funding reductions to employees’ health insurance plans; the elimination of $27.7 million in grants to supplement teachers’ retirement funds; and changes to employee overtime policies estimated to cost the state nearly $20 million.
Other initiatives the comptroller wants to protect include money for: a YouthWorks summer jobs program; rental housing programs; protections against hate crime; annual salary reviews for specific classes of employees; making school buildings healthier for students; and improving safety at public and nonpublic schools.
Schutz said Kopp agrees that “removing the items on the comptroller’s list from the cuts to be enacted tomorrow is a good move.”
Hogan spokesman Mike Ricci said Tuesday that the governor “doesn’t want to make any of these cuts, but he recognizes that not taking action is not an option.”
Ricci said the governor looked forward to seeing specific alternatives suggested to the cuts “because the consequences of inaction and voting ‘no’ are severe.”
The cuts Franchot doesn’t oppose still would remove nearly half a billion dollars — $466.8 million — from the state budget, O’Brien said.
Schutz, Kopp’s spokeswoman, said any budget cuts “should be discussed within a broader consideration of present and future use of federal funds, the use of other state reserve funds, and with consideration of future legislative overrides of the governor’s vetoes of revenue enhancements, such as the increase in tobacco tax enacted in the last session.”
Hogan in May vetoed an increase in the per pack tax on cigarettes, new taxes on nicotine vaping systems and a first-in-the-nation tax on digital advertising.
Unions objected to proposals that would eliminate workers’ raises, and asked the board to put off voting on the cuts to give more time for review and for more information to become available about the state’s finances.
Patrick Moran, who oversees the union representing the largest number of state employees, called Franchot’s decision “a step in the right direction.” But the results “won’t be in until Wednesday,” said Moran, president of Maryland Council 3 of the American Federation of State, County and Municipal Employees.
Advocates for education, as well as others who favored waiting to get more data about the state’s incoming revenues and possible assistance from the federal government, urged the board not to make the cuts — or to at least postpone action.
As chair of the National Governors Association, Hogan has stressed the need for federal aid to help states address budget pressures brought on by the pandemic.
Maryland’s U.S. senators, in a letter Tuesday to the Board of Public Works, said they were pushing in the Senate for new fiscal relief to state and local governments. Democrats Ben Cardin and Chris Van Hollen said it would be “premature” to proceed with the cuts.
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“If the state does move forward with budget cuts, we urge you to include contingencies to automatically reverse them if new state budget estimates or additional federal relief makes those cuts unnecessary,” the senators wrote.
Democratic U.S. Rep. Anthony Brown, who represents parts of Anne Arundel and Prince George’s counties, said he is also working with the rest of Maryland’s congressional delegation to approve federal aid for the states.
Brown told the board in a letter that Hogan’s proposal on the wages and benefits of state workers “severely undermines the dignity and morale of workers upon whom our citizens depend for services.” The state should consider other measures, Brown said, such as encouraging some workers to take early retirement or developing a furlough plan based on salary levels.
Democratic leaders of Maryland counties and Baltimore City also wrote to the board Tuesday, arguing that any cuts be deferred “until there is more clarity about the depth of the fiscal plight we collectively face.”
They said the income tax filings, due July 15 this year, typically provide “a material indicator of nonwage income, among the more difficult elements to forecast, especially in difficult times.” They also noted the possibility of additional future aid from the federal government.
The letter was signed by Mayor Bernard C. “Jack” Young, Anne Arundel County Executive Steuart Pittman, Baltimore County Executive John Olszewski, Howard County Executive Calvin Ball, Prince George’s County Executive Angela Alsobrooks, Frederick County Executive Jan Gardner, Montgomery County Executive Marc Elrich and Maryland Association of Counties President Sharon Green Middleton, who is also a Baltimore City Council member.
Baltimore Sun reporter Yvonne Wenger contributed to this article.