5-day state furloughs likely Localities also expected to take hit in new round of cuts.

December 10, 1991|By William Thompson | William Thompson,Evening Sun Staff

In the sixth and perhaps most painful round of budget cuts this year, Gov. William Donald Schaefer today was expected to unveil a $200 million cost-reduction plan that includes more cuts to state services, sharply reduced aid to local governments and, for the first time at the statewide level, employee furloughs.

The governor was scheduled to brief legislative leaders on the budget-balancing plan at a private meeting in Annapolis.

Maryland still faces a budget deficit of about $220 million, brought about by a sluggish economy that has slowed revenues and increased the amount the state must spend on social services, particularly Medicaid.

Already, state officials have been forced to cut and shift about $1 billion from the current $11.6 billion budget.

State House sources said the governor will propose that state agencies absorb $20 million to $25 million in cuts, which amounts to another 1.5 percent decrease.

Depending on how individual agencies decide to curb their spending, the proposal could mean cutting services to the public and possibly more firings. So far, about 1,500 state employees have lost their jobs.

The governor, once an ardent opponent of employee furloughs, also is expected to propose that state employees be required to take off up to five working days without pay, sources said.

The precise savings from furloughs is difficult to determine, but budget analysts say the daily government payroll is $4 million to $5 million.

Of the latest projected $220 million deficit, about $140 million is attributed to revenue shortfalls and the remainder to soaring Medicaid costs. Much of the state's unpaid Medicaid bills will have to be "rolled over" into fiscal 1993, which begins July 1.

The governor was expected to announce that he wants to eliminate more than $20 million in capital projects. This includes about $6 million set aside for Program Open Space, which helps local governments purchase undeveloped land for parks and recreation.

But local government may be hit hardest by Schaefer's latest plan. According to sources, Schaefer's proposal could ask that more than 50 percent of the projected deficit be absorbed at the local level.

That would be tough news for local governments, who saw their state aid cut by nearly $200 million in late October when the governor and the legislature agreed on a package that trimmed $450 million from the state budget.

"We're very, very concerned," said David S. Bliden, executive director of the Maryland Association of Counties. "Governments are straining. We realize that we have to be a part of the solution, but we've already made drastic cuts."

Bliden said local governments, already dazed by previous budget cuts, have little flexibility left for the next round.

"Those large cuts will have to be passed off to local constituents," he said, adding that education, police and fire protection and public works will suffer even more than they have.

Bliden said that with the state less able to provide traditional levels of financial aid, local jurisdictions may be forced to increase property taxes.

Except for the proposed agency cuts, nearly every item on the governor's cost-containment list requires approval of the legislature.

For a week, a legislative panel has been holding public hearings across the state in an effort to gather public opinion about how the state raises and spends revenues.

The joint Senate and House panel, nicknamed the "Gang of 26," was scheduled to meet today at noon to review several bailout measures. According to a legislative source, the group was to look at three fiscal plans -- one that relies heavily on new taxes and revenues, one without new taxes and a third that combines the two.

Schaefer could ask the General Assembly to approve the cuts at a special session in Annapolis before the regular 1992 session begins Jan. 8. But lawmakers, who were aware that a sixth round of cuts would be proposed by the governor before the end of this calendar year, have said there is little reason to convene early.

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