Legislative leaders, saddled with a new budget hole of $516 million and a deadline for balancing the budget, said yesterday that they might resort to additional furloughs for state workers and slashing aid to local governments that have largely been spared in previous rounds of spending cuts.
Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch laid out some budgetary options yesterday as the state's revenue forecasters officially reported that they now anticipate more than $1.1 billion less in tax revenue during the next 16 months. That means they will have to drastically cut a spending plan they had already begun to craft for next year.
Gov. Martin O'Malley pledged to work with the Democratic leaders to finish the budget before the General Assembly session ends in little more than a month. The governor, also a Democrat, interrupted a meeting at the State House with his budget team yesterday to hold a news conference but offered few clues as to how they would address the budget gap.
"We're right now going over the various options, none of them very good," O'Malley said. "It's all going to be very painful."
The worsening fiscal picture has forced the governor to abandon the rosy outlines of a budget plan he offered last month that included billions of dollars in federal aid from a stimulus package. At the time, he said he would be able to avoid some of the most painful cuts, such as a reduction in aid to school districts and plans to lay off 700 state workers.
But the latest revenue projections leave the governor and lawmakers with yet another gap to fill. The scenario is becoming familiar as state revenues have steadily deteriorated for the last several years.
The latest projections from the state Bureau of Revenue Estimates account for the impact of the deepening recession on income and sales tax collections, which have slowed with increasing unemployment and declining consumer confidence. There is no indication that the recession will end this year, and "tremendous uncertainty" regarding revenues remains, said David F. Roose, the bureau's director.
To keep the operating budget balanced during the current budget year, state officials plan to shift pots of money from other funds. But they must pare next year's budget more than they had expected.
While O'Malley has indicated layoffs might be revisited, legislative leaders have rejected the option. Miller said yesterday that an alternative is additional furloughs, and legislative analysts have suggested a 1 percent across-the-board pay cut.
