ANNAPOLIS -- Gov. William Donald Schaefer recommended yesterday laying off at least 1,800 state employees, cutting spending on higher education and local government aid programs and tapping the state's "rainy day fund" for the first time to eliminate a state budget deficit that now has grown to $423 million.
Cuts and other actions taken by the administration just last month had reduced spending by $180.6 million, the deficit projected earlier this year. But the Board of Revenue Estimates handed the governor the bad news yesterday that the deficit had grown much worse: by an additional $242.6 million.
Astonished state employee unions said there must be other ways to reduce state spending than by putting people out of work, but legislative leaders seemed to agree layoffs might be inevitable.
Depressed by the gloomy news, Mr. Schaefer said proposing layoffs was a new experience in his 35 years in public office and called it "the most difficult thing I've ever done." Before his re-election Nov. 6, he denied such an option was even under consideration.
He said he would not raise taxes to offset the deficit. "I have no plans of increasing taxes," he said.
The layoffs discussed yesterday could become effective as early as Jan. 1, less than four weeks from now.
Large agencies, such as the health department, would most likely be hardest-hit, although no decisions have been made on exactly who would lose jobs or what criteria would be used in making such decisions, administration budget officials said. However, they did come armed with an attorney general's opinion that state personnel laws requiring layoffs by seniority and only after adequate notice were "inapplicable to employees released because no appropriations are available to pay salaries."
Three departments that oversee welfare programs, prisons and the custody of juvenile delinquents would be exempted from layoffs under the governor's plan.
"We feel the governor is pressing the panic button with this," complained William Bolander, executive director of Council 92 of the American Federation of State, County and Municipal Employees, representing about 10,000 state employees.
"We feel there are a whole lot of options left that need to be considered," he said.
Michael P. McCusker, a spokesman for the Maryland Classified Employees Association, which represents about 21,000 state workers, agreed and said, "This is some Christmas present for 1,800 employees."
But given the severity, timing and swiftness of the state's economic plunge -- state Treasurer Lucille Maurer called it a "toboggan slide" -- the governor and legislative leaders alike seemed to agree there were few options left.
"To go with a [deficit reduction] system that does not involve employee layoffs is not a realistic system," said Sen. Laurence Levitan, D-Montgomery, chairman of the Senate Budget and Taxation Committee.
His House counterpart, Appropriations Committee Chairman Charles J. Ryan, D-Prince George's, agreed.
But precisely what mix of program reductions, layoffs or other belt-tightening measures will ultimately be approved is uncertain.
The governor actually showed legislative leaders yesterday morning five different options for balancing the budget. These alternatives, prepared by Charles L. Benton, his budget secretary, included one in which no one would be laid off but the entire "rainy day fund" would be used up, as would proceeds from the sales of bankrupt savings and loans. Another of the options not given serious consideration was to absorb the whole deficit in layoffs, which would put 12,800 state employees out of work.
Several of Mr. Schaefer's proposals would require legislation. These include using part of the $126 million "rainy day fund," halting for the second half of this fiscal year the purchase of any additional parkland and transferring to the general treasury a portion of corporate income tax revenue that now is diverted to the Transportation Trust Fund.
Mr. Ryan and Mr. Levitan said legislative leaders hoped to meet within the next few days to decide what to do.
But several lawmakers have already told the governor they do not want to reduce aid programs to local governments that are experiencing budget problems of their own.
"For the past four years, when there were surpluses, the governor hasn't wanted to consult with the legislature," complained Senate President Thomas V. Mike Miller Jr., D-Prince George's. "But now, when there's a budget deficit, all of a sudden the General Assembly is the decision-making body."
As bad as the state's financial crisis is, Mr. Schaefer emphasized that virtually every other state was experiencing similar problems and that many were in comparatively far worse shape. He said Maryland remained sound financially, adding that there was no need to raise taxes and no plans to do so.
But several officials at yesterday's meeting, including Mr. Schaefer, warned that the state's economic problems were likely to get worse before they got better.