Md. panel OKs $362 million in budget-balancing measures

O'Malley's plan includes laying off nearly 70, closing psychiatric hospital

November 19, 2009|By Laura Smitherman | laura.smitherman@baltsun.com

A Maryland spending panel decided Wednesday to lay off nearly 70 workers, reclaim cash heading for an emergency reserve fund and move forward with the closure of a psychiatric hospital as it signed off on $362 million in budget-balancing measures proposed by Gov. Martin O'Malley.

The actions by the Board of Public Works bring midyear spending reductions and fund transfers to Maryland's operating budget to about $1 billion just five months into the fiscal year. To balance the books, the board also recognized new revenue that had not been anticipated.

The board, which consists of O'Malley, Treasurer Nancy K. Kopp and Comptroller Peter Franchot, can make revisions to the $13 billion annual spending plan set by the General Assembly earlier this year. All three are Democrats.

Despite the repeated budget tweaking, O'Malley said Maryland is in better financial shape than other states. And while he said he didn't want to make many of the budget cuts, he promoted some as an improvement in government efficiency.

The administration plans to reduce energy consumption by $800,000, close highway rest stops and reduce the hours they are open to cut $300,000, deny medical claims under Medicaid for unnecessary services or ineligible residents to save $11 million, and negotiate prices with vendors down by $500,000.

Overall, the actions approved by the board reduced spending by about $103 million. Nearly $6 million in savings is achieved by abolishing more than 100 state jobs, including nearly 70 filled positions. Many of those positions are at the John L. Gildner Regional Institute for Children and Adolescents, a residential treatment center in Rockville targeted for downsizing.

The board also took $25 million from the state's so-called rainy-day fund, a backup pot of money that some policymakers have been urging the governor to tap.

An additional $116 million is transferred from other accounts into the operating budget, including $25 million from the University System of Maryland. Chancellor William E. Kirwan said in a statement that the transfer affects cash reserves that support capital projects, not the university's operating budget.

The board also accounted for $143 million in new revenue. That includes income taxes collected during a recent amnesty that allowed scofflaws to settle unpaid bills and avoid penalties, and corporate taxes on Constellation Energy Group's deal to sell half its nuclear power business to Electricite de France, a French utility.

Some budget cuts have drawn protests from advocates and state employees. Several supporters of the Upper Shore Community Mental Health Center in Chestertown packed the board's meeting room on Wednesday to oppose its closure, saying the facility serves a vital role in a rural community with fewer options for care.

The facility was slated to close in a previous round of budget cuts, but Health Secretary John M. Colmers agreed to review that decision after acknowledging he gave the board incorrect information about how many of the patients are from the Eastern Shore. He had said about half are from other parts of the state, presumably places closer to treatment facilities, but most are from the rural Shore. He later apologized.

Colmers came back to the board on Wednesday reiterating his recommendation to close the facility that provides inpatient treatment to psychiatric patients and explaining a more detailed transition plan that would move the hospital's substance-abuse unit into a county-run program at the facility while bolstering community mental health programs nearby.

The board decided not to reconsider the closure in a 2-to-1 vote, with Franchot voting to take the proposal off the table. He backed a plan put forward by Upper Shore employees that would have reduced staffing and beds to save money but would have kept the state-run hospital open.

"I don't think this decision is the right one," Franchot said, expressing concern about patient care and lost jobs. "I don't think this got the kind of re-examination it should have gotten."

Several state lawmakers said they would resurrect the issue during the General Assembly session that begins in January.

Under Colmer's plan, Upper Shore would stop admitting patients early next year and transfer all remaining patients by March.

Responding to concerns, the board did scale back a proposed $9 million cut to state grants to private colleges and universities, money that's primarily used for need-based financial aid to Maryland residents. Tina Bjarekull, president of the Maryland Independent College and University Association, had raised concerns that the cut was too deep and together with previous reductions would exceed a statutory cap on the amount of money that can be taken back once appropriated.

Budget Secretary T. Eloise Foster called the cut to the college grants "legal" and "constitutional." She explained that the 25 percent cap applies to the much bigger agency budget that includes the $52 million in grants originally in the spending plan. Nonetheless, the board reduced that cut Wednesday to $7 million.

Meanwhile, another huge shortfall looms next year, and policymakers are girding for more difficult choices.

That gap between revenues and expenses has been projected at $2 billion, although the figure falls when accounting for more than $300 million in midyear cuts, administration officials noted. A balance of $123 million projected to be left over in this year's budget also could be tapped.

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