September 26, 2008|By Laura Smitherman | Laura Smitherman,laura.smitherman@baltsun.com
Gov. Martin O'Malley directed state agencies yesterday to look for budget cuts of up to 5 percent that could include layoffs or unpaid furloughs for state employees, as he seeks savings in this year's budget and prepares a spending plan for next year.
An economic downturn has cut tax collections, so O'Malley must make cuts for the fiscal year that began in July to keep the $14 billion operating budget in balance, as required by law. The Democrat plans to present hundreds of millions of dollars in proposed trims at the Board of Public Works meeting Oct. 15.
Administration officials said yesterday that they are looking at eliminating vacant state jobs and would not rule out employee layoffs or furloughs. Local governments for Prince George's and Montgomery counties have asked workers to take unpaid leave to help close their budget gaps, and the University System of Maryland instituted a hiring freeze this month in anticipation of state-level budget cuts.
O'Malley also indicated areas of the budget he would try to leave untouched, including unemployment insurance, programs aimed at preventing home foreclosures and assistance for residents struggling with energy bills. While the governor wants a menu of choices, his budget secretary indicated cuts could be less than 5 percent in many agencies.
Unions and other interest groups are expected to oppose some cuts, and Republicans offered their own plan yesterday to solve the state's budget morass, while repudiating O'Malley's fiscal stewardship.
The state faces a $432 million revenue shortfall, which could reach $1 billion in the next fiscal year.
Patrick Moran, Maryland director of the American Federation of State, County and Municipal Employees, which represents thousands of state workers, said layoffs would worsen understaffing among corrections officers and social service providers, and furloughs would hurt already strapped households.
"Many are struggling to get by in this tough economic period, and that would be devastating to a number of folks," Moran said.
Republicans contend that budget problems stem from overspending by Democrats. Their plan would repeal tax increases approved by the General Assembly and signed by O'Malley last year, which were designed to close a $1.7 billion budget shortfall, while freezing spending in the next fiscal year and implementing what they contend would be a more lucrative plan for slot machines.
"We don't have a revenue problem as much as we have a spending problem," said Del. Anthony J. O'Donnell of Southern Maryland, the House minority leader.
The House GOP caucus, by a vote of more than two-thirds of its members, decided to oppose the November referendum in which voters will decide whether to allow 15,000 slot machines at five locations around the state. Instead, it unveiled a plan members say would generate more money because licenses would be awarded by competitive auction rather than through a politically appointed commission.
O'Malley spokesman Rick Abbruzzese called the Republican budget proposal "unworkable," noting that the legislation putting the slots question to referendum has been the only slots bill to pass both chambers of the General Assembly after years of debate on the issue. Democrats have solid majorities in both chambers, so Republican-drafted proposals have little chance of passage.
Budget Secretary T. Eloise Foster said that she is preparing alternatives for the governor and that agency budget reductions would likely be 2 percent to 5 percent. She said O'Malley might cut more than needed to balance the budget in this fiscal year in order to limit the shortfall going into next year.
The governor presents the next budget to the General Assembly in January.
"The more reductions we make now, the better off we will be in dealing with an extraordinarily difficult budget next year," O'Malley said. "While these cuts will not be easy, it is clear that the economic crisis that our nation is experiencing will have a dramatic impact."
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