Maryland braces for federal budget cuts

House budget would slice $61 billion nationwide; Senate Democrats propose $10 billion in cuts

March 06, 2011|By Jamie Smith Hopkins and Andrea K. Walker, The Baltimore Sun

Every government-run center in Maryland that connects out-of-work residents with job openings, resume help and training grants would close.

AmeriCorps and several other service organizations would shut down, with no funding to support 170,000 positions in the state, including teachers in poor neighborhoods and those who deliver meals to homebound elderly residents.

And a federal agency with nearly 13,000 employees in Maryland — the Social Security Administration — could end up furloughing all of its workers for a month.

Those are some of the worst-case scenarios coming out of congressional budget negotiations, according to state officials and labor leaders analyzing the proposals. The Republican-led House of Representatives would ax $61 billion in federal spending under legislation passed two weeks ago. Senate Democrats released their own budget plan Friday that would cut $10 billion. Both proposals could go up for a vote in the Senate this week.

Republicans who are leading the budget-reduction charge say they're taking the painful steps necessary to address a record budget deficit expected to hit $1.5 trillion this year and to rein in the multi-trillion-dollar federal debt. The red ink is strangling the economy, they say.

Economists have warned for years that the deficit — which rose rapidly under both Presidents George W. Bush and Barack Obama — could not go up forever without severe consequences. But now that the hour of reckoning has neared, cash-strapped states with their own budget woes are wondering how they will manage.

In a letter Friday to Maryland's congressional delegation, Democratic Gov. Martin O'Malley said the House budget plan "would stall the progress communities have made towards climbing out of the recession" and would "seriously endanger our state's most vulnerable residents."

"The states are in worse fiscal shape than they have been in decades, perhaps since the Great Depression," said Bill Galston, a senior fellow at the Brookings Institution and former policy adviser to President Bill Clinton. "So if there are additional reductions in federal support to states, it will make a very bad problem that much worse. And further reductions do seem inevitable. The only question is how large they will be."

Federal spending has goosed the economy here during better times and insulated it from the worst of the recent pain. Maryland has an outsized share of federal jobs and contracting dollars, which means it can probably expect an outsized squeeze from any tightening of Uncle Sam's belt.

Nearly 290,000 Marylanders work for the federal government, at job sites in the state or in Washington and Virginia. That's one in every 10 working residents, according to the state Department of Business and Economic Development.

Contractors are also ubiquitous. Maryland firms handled $34 billion in federal contract work in fiscal 2009, according to the Census Bureau — more per capita than all but three other states.

State officials have calculated the House's reduction in federal grants to Maryland's state and local governments at $178 million. But that's just the starting point. That figure doesn't capture the effect of furloughs or layoffs, for instance, that would depress state tax collection, said David Romans, deputy secretary of the Maryland Department of Budget and Management.

And residents would see diminished federal services, unions warn. Claims for new benefits and problems in need of resolution would pile up if the Woodlawn-based Social Security Administration furloughs all employees for a month, according to the American Federation of Government Employees.

The House cuts also would affect agencies that fund scientific research, a substantial chunk of it conducted at Maryland universities. Johns Hopkins University and its Applied Physics Laboratory pull in more federal research-and-development dollars than any other academic institution in the country — and have for a generation.

One of the major funders of research at the Laurel-based APL is the Department of Defense, which would get a modest budget increase under the House proposal. But other agencies would see budget reductions, including NASA.

The agencies funding research at the Hopkins campus in Baltimore would take a combined 6 percent hit to their budgets, said Scott L. Zeger, the university's vice provost for research. That would translate into a $60 million reduction in federal research dollars going to Hopkins, which could mean layoffs.

"There are costs to short-term savings, and I don't know that they're being assessed appropriately," Zeger said. "I also worry that we have forgotten how America became the world's dominating scientific engine, and that was with fundamental investments in science."

Economic impact

Contradicting predictions about the House budget's effect on the economy abound.

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