O'Malley orders $200 million in spending cuts

Governor takes first step toward reducing state's budget shortfall

May 11, 2007|By Andrew A. Green | Andrew A. Green,Sun reporter

Gov. Martin O'Malley ordered his Cabinet secretaries yesterday to find spending cuts totaling $200 million, saying reductions in services and even layoffs of state workers might be necessary to begin addressing the state's impending fiscal crisis.

If the cuts are realized, though, they would make but a small dent in next year's budget shortfall, which is expected to be as much as $1.5 billion. But O'Malley said the cuts - about 2.5 percent of the general fund - may not be the last ones he makes and will lower the amount he will be forced to seek from new revenue sources, such as higher taxes and slot machine gambling.

"This is the nuts-and-bolts, put-the-ship-in-the-bottle process of reducing a budget deficit," O'Malley said.

Yesterday's order marks O'Malley's first step in addressing what could be the defining political and management challenge of his term.

The Democrat and former Baltimore mayor came into office with big promises for investments in school construction, health care, public safety, K-12 and higher education, roads, mass transit and environmental protection.

But at the same time, he is limited by one of the state's worst fiscal crises in years and by the potential political consequences of raising taxes.

Since taking office, O'Malley has faced pressure from legislators from both parties to act quickly on the budget, but he has resisted, saying he needs time to develop a solution and sell it to the public.

Sen. Ulysses Currie, the Prince George's County Democrat who chairs the Budget and Taxation Committee, said looking for $200 million in cuts is a good start.

"There has been a lot of discussion about raising revenues, which taxes you would raise, and the public would want ... for us to do what the governor is doing now, and that is beginning to find efficiencies in government and beginning to make some cuts," Currie said.

Republicans tried during the legislative session to force deeper spending cuts, and Sen. David R. Brinkley, the minority leader from Frederick County, said he thinks O'Malley's action sends an important message. He said the state can likely handle even greater spending reductions.

"But what we don't have room for is announcing we're going to extend tuition freezes, as he did last week, and then come through with this kind of charge this week," Brinkley said. "There are some serious problems that have to be challenged, and you can't pander to the student population while at the same time you may be affecting people's livelihood."

The governor said he hopes to minimize disruptions to the services Marylanders rely on and will hold as relatively harmless the agencies that have suffered from underfunding in recent years, such as juvenile services, public safety and corrections and the state police.

But he said he will demand that his agency bosses work to reduce overtime, reorganize senior staffs, limit travel, institute energy conservation and shrink communications staffs. Additionally, programs that fail to produce results could be eliminated, he said.

Sue Esty, a spokeswoman for the American Federation of State, County and Municipal Employees, which represents thousands of state workers, said the union is happy to work with the administration on finding savings.

But she said layoffs could not only disrupt the lives of those who lose their jobs but also endanger the state's ability to provide vital services.

"Just go down the line," she said. "In parole and probation, the caseloads exceed national standards, and that leads into potentially insufficient supervision of criminals."

"Social workers are already at caseloads that exceed recommendations, and that's for potential abuse cases, foster care - critical services for our citizens," Esty said.

This isn't the first time in recent years that state leaders have scoured the budget for savings.

Facing severe shortfalls at the beginning of his term, former Gov. Robert L. Ehrlich Jr. and the General Assembly made hundreds of millions in cuts to the fiscal 2004 budget.

As a result of those cuts and others, O'Malley might find identifying savings easier said than done, said House Speaker Michael E. Busch, an Anne Arundel Democrat.

"I believe this administration, like any other, should try to find efficiencies in government, but I'd caution [against] the idea that somehow there's $200 million worth of cuts within a lot of the agencies, unless you're going to get into Medicaid and higher education, because most of the agencies are fairly thoroughly scrubbed," he said.

O'Malley has made his abilities to hold down government spending and to find efficiencies a major part of his public pitch as he seeks to resolve the budget shortfall.

In his first budget, he reduced the rate of growth, though spending in the state's general fund still went up by about 6.1 percent.

Factoring out one-time spending on capital projects, ongoing spending went up by about 8.2 percent, according to figures from the Department of Legislative Services.

O'Malley said his administration has already found ways to save money. Closing the House of Correction in Jessup will save about $5 million a year, O'Malley said. And he said Department of Natural Resources Secretary John Griffin was able to reduce the number of assistant secretaries from five to three.

But finding further cuts will be a bigger challenge, said Griffin, who said he went through several other rounds of cuts during a previous stint with the state.

"This, for me personally and for many people in our department, is not a new experience," Griffin said. "Not that it's necessarily easy, but you look at the challenge as an opportunity to realign ourselves and focus more on things that are most important to us."

andy.green@baltsun.com

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