Md. Budget Crisis Could End O'malley Tuition Freeze

July 23, 2009|By Julie Bykowicz | Julie Bykowicz,

State officials are signaling that Gov. Martin O'Malley's hallmark tuition freeze at public universities could end soon as Maryland grapples with a budget crisis that shows few signs of easing.

"I think the time has come to look at moderate tuition increases," said state Treasurer Nancy K. Kopp at a Wednesday meeting of the State Board of Public Works, where $281.5 million in midyear cuts to higher education and other agencies were approved.

O'Malley, a Democrat who sits on the spending panel, told her that many agree. The freeze - a campaign pledge that O'Malley has honored since his election in 2006 - was "not meant to last forever," he said.

Comptroller Peter Franchot, the third member of the board, later quipped that it was the most he'd seen O'Malley "thaw" on one of his signature accomplishments.

The board was forced to approve the deep cuts even though the state's budget year began a little more than three weeks ago, and officials lamented the dire economic situation that will lead to at least $420 million more in reductions by Labor Day.

By law, the state's budget must be balanced, and slumping tax revenue collections are triggering offsetting budget cuts - a condition in nearly every state.

O'Malley has long championed affordable tuition as a way to help Maryland families and develop an educated work force in the state. But budget woes mean that tuition could rise on O'Malley's watch for the first time as the governor prepares for an expected re-election bid next year.

While it is too late to change tuition for the semester that begins next month, University System Chancellor William E. Kirwan said an increase for the semester that begins in January is "definitely possible," though he said it is premature to speculate on whether one would be necessary or how large it might be.

"We need a little more information on where the bottom is in terms of the decline in state revenues," he said. "We're undoubtedly not out of the woods yet."

Kirwan has scheduled a conference call this morning with the Board of Regents to discuss Wednesday's nearly $40 million in cuts to the university system, but not tuition, he said.

Higher education is one of the largest discretionary areas in the state's $14 billion operating budget, and university officials can offset budget reductions by raising tuition, if the regents agree.

Meanwhile, O'Malley plans to meet with his Cabinet at noon to ask members to scour their budgets for more potential cuts. He said Wednesday that no reductions to primary education are planned. But the next round of cuts is expected to target state workers through furloughs and pay reductions, as well as state aid to counties and Baltimore City.

This time, the state's work force of more than 70,000 lost 58 positions, nearly half of them in the Department of Natural Resources.

DNR Secretary John R. Griffin said most employees who are being laid off were informed Tuesday night and 18 received letters Wednesday morning. The job cuts affected all areas of the department, including forestry workers, analysts and administrators, and 3.5 vacant positions were eliminated.

Griffin said the pink slips were particularly painful in a department in which the average age is 47 and employees tend to spend their entire careers.

"This is not fun at all, particularly in this economy," he said.

The Department of Business and Economic Development lost eight employees and eliminated three vacancies. The department closed the two Welcome Centers with the lowest visitor counts, Bay Country in Queen Anne's County and Sideling Hill in Washington County. The Department of Health and Mental Hygiene lost seven workers and four vacancies and is reducing services at several facilities, including Western Maryland Hospital.

Health Secretary John M. Colmers compared the cuts to his agency with "going five rounds with Muhammad Ali."

"We are getting beat up pretty good," he told the Board of Public Works.

O'Malley said the state is "striving not to add to the unemployment challenges" of the bad economy as he works on the next round of reductions, a signal that he favors reducing employee compensation over sweeping layoffs.

Rick Abbruzzese, an O'Malley spokesman, said reductions in employee compensation, which are in discussion, could include furloughs and salary reductions.

Patrick Moran, Maryland director of the American Federation of State, County and Municipal Employees, said the state "can't go down the route" of large-scale layoffs.

Those who rely on Maryland services "come to the state as the last vestige of hope," he said. "Our people see the realities of the economic situation every day."

He said the union will review O'Malley's proposals for employee compensation and "see whether it's feasible." Asked whether the union favors salary reductions over furloughs, he said, "We'll argue for whatever makes the most sense for our members."

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