O'Malley warns of high `cost of delay'

Outlines budget cuts before special session

October 24, 2007|By James Drew | James Drew,Sun reporter

Gov. Martin O'Malley described yesterday a scary scenario if the General Assembly fails to take action during a special session starting Monday to eliminate a projected $1.7 billion shortfall in the state budget next year.

The first-term Democratic governor released a 20-page report, dubbed the "Cost of Delay" budget, that outlines cuts of $850 million to local jurisdictions and $800 million to state agencies and programs. Democratic legislative leaders released a similar list of doomsday cuts over the summer in arguing for new revenue measures.

"If for some reason a consensus on the revenue package should elude us, I would be left to put forward this budget of cuts when we come back in the regular session," O'Malley said.

House Minority Leader Anthony J. O'Donnell said, "Governance through fear is abhorrent to the American psyche."

"These are not the types of things that anybody is seriously contemplating," said O'Donnell, a Southern Maryland Republican. "The governor does not seem serious about making spending reductions. He wants to pick things that will cause fear in people."

Flanked by his Cabinet members outside the State House, O'Malley listed a number of areas that would face cuts if his package is blocked: Medicaid, education, teacher pensions, libraries, police aid, drug treatment, public health, and open space.

"I do not believe this is what the people of Maryland and their representatives would choose: a weaker state, a state where people in need of critical services are pushed off health care rolls, a state where we are not able to keep state police barracks open, a state where we have to close state parks," he said.

An hour before the news conference, Comptroller Peter Franchot released a letter cautioning Maryland legislative leaders "against acting in haste" to approve O'Malley's sweeping plan, saying the lack of an "immediate fiscal crisis" and the governor's failure to release details of his proposals could lead to "unintended consequences."

Franchot, a Democrat, repeated his call for the General Assembly to wait until the regular session starting in January to consider O'Malley's proposal.

"In my view, the volatility of the U.S. and Maryland economies, the absence of an immediate fiscal crisis and the lack of detail about the plan could all combine to create a perfect storm of unintended consequences. Rather than act in haste, the fiscally prudent and practically wise thing to do would be to move cautiously and deliberatively throughout this process," Franchot wrote in the letter to legislative leaders.

But Senate President Thomas V. Mike Miller, Jr., a Southern Maryland Democrat, said he thought the governor was being "very gentle."

"I've been here in previous years when we've had difficult times. We had state workers getting laid off, working an additional five hours a week without pay, and closing libraries," he said.

O'Malley wants to raise the state sales tax rate from 5 percent to 6 percent and broaden the levy to cover more services. He would cut the property tax by 3 cents per $100 in assessed value, double the cigarette tax to $2 a pack and increase the car titling tax.

He has also proposed overhauling the income tax structure to charge lower- and middle- income Marylanders less but top earners much more; raising the corporate income tax rate from 7 percent to 8 percent and closing so-called loopholes; tying gas-tax increases to rises in the cost of construction materials; limiting projected growth in education spending under the Thornton plan; and legalizing slot machine gambling.

Franchot said figures to be released in December by the Board of Revenue Estimates - which consists of the comptroller, treasurer, and budget secretary - would provide "a much clearer sense of Maryland's long-term economic outlook." The board will update the revenue estimate for this fiscal year, and analyze how much revenue the state will get in fiscal year 2009.

Asked for his reaction, O'Malley noted that Franchot as a state delegate backed bills similar to many of the proposals in his package.

"Everyone is entitled to their policy opinions. We're not entitled to our own facts," said O'Malley. "The fact of the matter is we face a very serious challenge and problem. ... There are very few serious people in this state capital, many of whom have worked on budget issues for 20 years, who would deny the fiscal truths we have been asserting."

Miller referred to Franchot as a "back-bencher."

"The governor is going to have to deal with him for four years. I don't anticipate Franchot improving. Foxes grow gray. They don't grow good," Miller said.

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