Spending deal is reached

O'Malley budget keeps funds for schools, stem cells

General Assembly

April 08, 2007|By Andrew A. Green | Andrew A. Green,sun reporter

Legislators have tentatively agreed on a budget plan that gives Gov. Martin O'Malley nearly all the funding he wanted for stem cell research, higher education, school construction and other priorities, ending a standoff that could have forced an extension of the General Assembly session past its scheduled close tomorrow night.

O'Malley met repeatedly with top leaders in the House and Senate in the past few days to make sure that extension didn't happen.

"We've accomplished a great deal working together during the session to make a historic investment in public education, higher education, stem cell research and open space," said O'Malley spokesman Rick Abbruzzese. "The governor is extremely pleased."

One of the key concessions in the deal, which would have to be completed in a conference committee meeting tomorrow morning and then approved by the full legislature, was the House of Delegates' agreement to delay for a year a $53 million payment for the Intercounty Connector, a long-awaited road linking Interstates 95 and 270 in the Washington suburbs.

Senators, in turn, agreed to some of the cuts House negotiators wanted to make in the University System of Maryland budget and other reductions.

"We came, I would say, two-thirds of the way toward where the House wanted to be in cuts to higher-ed, but we didn't go all the way," said Sen. Ulysses Currie, the Prince George's County Democrat and chairman of the Budget and Taxation Committee.

That freed up enough money to give O'Malley $23 million for stem cell research - just shy of the $25 million he requested.

Negotiations on the capital budget also secured a deal to provide all of the $400 million in school construction money O'Malley wanted, as well as enough to allow the governor to keep his promise to fully fund Program Open Space.

Legislators are required by the state constitution to pass a balanced budget. If they are not able to reach and ratify a deal by midnight tomorrow, a special session would be required.

The deal on O'Malley's $30 billion proposal does little to address the significant budget problems Maryland faces in the next few years.

The budget, which takes effect July 1, is balanced by using $1 billion from the state's rainy day fund, taking that reserve down to the minimum allowed by law.

State analysts predict that the following year's budget will be out of balance by as much as $1.5 billion, requiring spending cuts, higher taxes, new revenue sources or a combination of the three.

Amid calls from O'Malley to hold off on taking steps to solve the long-term budget problems until he has time to find efficiencies in state government, legislators avoided most debate over taxes and legalizing slot machine gambling - an idea proponents say could add $800 million a year to the state's coffers.

Republicans made a push for eliminating almost all new spending from the budget and, while their plans were rejected, the question of how deeply to cut became a stumbling block in the budget negotiations between the House and Senate.

Del. Norman H. Conway, the Appropriations Committee chairman, opposed O'Malley's plan to delay for a year the $53 million ICC payment.

The delay would not affect the road's construction schedule, but Conway, a Salisbury Democrat, said it made no sense to add to next year's expected budget problems. He pushed for deeper cuts in other areas, which senators initially rejected.

But a report Friday showing a decline in sales tax collections and weak growth in other revenues prompted negotiators to look for ways to increase the balance left in the state's accounts.

Because the spending plan used up so much of the reserve, a sudden drop in revenues could have posed a serious problem, fiscal leaders said.

As a result of the deal struck yesterday, the state will be left with nearly $60 million in extra reserves. Currie said that would keep Maryland in good stead for the moment.

"For the moment - that's the word," he said. "This year is just a sideshow, if you will, compared to what we have before us."

andy.green@baltsun.com

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