More cuts in budget

894 jobs eliminated as state sees tax revenues plunge

March 05, 2009|By Gadi Dechter | Gadi Dechter,gadi.dechter@baltsun.com

State officials approved $82 million in cuts to Maryland's operating budget yesterday, bringing Gov. Martin O'Malley's midyear trims to more than $500 million as he struggles to keep spending in line with plummeting tax revenues, as the law requires.

For the third time in the current fiscal year, the Board of Public Works voted to cut O'Malley's $14 billion budget, in part by abolishing hundreds of vacant positions and formally accounting for $34 million saved from a worker furlough plan.

Budget Secretary T. Eloise Foster told the board that the cuts take into account $300 million in revenue write-downs from shrinking tax collections expected this month. She said that no more reductions likely will be necessary during the fiscal year ending in June.

Though the 894 job cuts include only two filled positions, state Treasurer Nancy K. Kopp said the diminished prospect of new hires means state operations will be strained. "These cuts are not painless or harmless," Kopp said. "And there will have to be more."

Maryland's roughly $3.7 billion share of the federal stimulus package has spared O'Malley from having to make hundreds of layoffs and deeper cuts, but Foster said yesterday that more trims might be necessary next year if the economy continues to deteriorate.

The board also completed and approved the sale of more than $490 million in general obligation bonds. Merrill Lynch beat out five other bidders with a 3.39 percent interest rate offer for about $200 million of the bonds.

The remainder of the bonds were sold in recent days to retail consumers, with a preference given to Maryland residents.

The average interest rate the state will pay on that portion of the bond sale is 3.47 percent.

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