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O'Malley plans more than $200 million in spending cuts to help Md. deal with financial crisis

October 10, 2008

ANNAPOLIS (AP) -- The governor and members of his budget office were putting the finishing touches Thursday on more than $200 million in recommended cuts that he says would be painful but have become necessary in Maryland as the national economic crisis deepens.

Gov. Martin O'Malley is aiming to address about $423 million in lower-than-expected revenues for the fiscal year. Talks so far have involved cutting about $250 million and using about $200 million of surplus in the budget left by lawmakers at the end of the last legislative session.

O'Malley told reporters before the meeting that the administration was "still short tens of millions of dollars in what we need to do."

"It's an awful time. It's a very challenging time. It's a national economic downturn the likes of which I've certainly never experienced or seen in my lifetime," O'Malley, a 45-year-old Democrat said. "I heard my grandparents talk about it, so we're going to do the very best we can."

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Adding to the challenge, the administration estimates that $1.8 billion in spending reductions already have been made since O'Malley took office in January 2007, leaving officials with tougher choices that "all affect real people in painful ways at a time when our economy was already kind of sluggish," O'Malley said.

"It's not that we're targeting these things now, but we're not left with anything else when 80 percent of our budget is public safety, public education and public health," the governor said.

A potential $400 million in cuts from the governor's budget office is listed in a document, "Sensitive Budget Reduction Proposals." Funds for health, education and public safety are under consideration.

In health, a 50 percent reduction to provider rate increases was on the list, a move that would save about $26.4 million. A 25 percent cut to health centers for raising tobacco and cancer awareness would save about $3.4 million.

The University System of Maryland also would take a $30 million hit in a reduction of its annual grant and a transfer of surplus back to the state's general fund. The state's Sellinger Aid Program, which provides money to private colleges, would be cut by $8.4 million, a 15 percent reduction.

In public safety, the Maryland State Police would freeze hiring of troopers, saving about $4.5 million, and 25 vacant positions would be eliminated.

Also, 283 vacant correctional officer positions would be cut in the Department of Public Safety and Correctional Services, saving $2.9 million.

Some of the larger budget cuts on the list, including six-day furloughs for state employees, which would save $48 million, won't be acted on at Wednesday's Board of Public Works meeting, but could be considered later after discussions with labor officials.

O'Malley said he didn't know when furloughs could kick in but that the sooner they're done, the longer period of time the state can stretch out the days, so that all six would not have to be used in one month.

"So, the sooner we do it - the more that we're able to spread that pain," O'Malley said.

Another large cut that won't take place next week but could be decided later is a 50 percent state reduction to the Geographic Cost of Education Index, which provides extra money to areas where education is more costly. That would save an estimated $38 million.

O'Malley said talks with school officials would be needed before action would be taken

"We have to have those conversations, so those will take a little longer before we zero in on them and are able to decide what we need to do," O'Malley said.

The governor also anticipated cuts in local governments, which rely on property taxes.

"I think you're going to see a lot of county governments looking at furloughs, a lot of municipal governments, too, and perhaps even outright layoffs," O'Malley said.




Some proposed cuts



HEALTH: A 1 percent reduction for community mental health services, $3.6 million

EDUCATION: Freeze enrollment in Purchase of Care (Child Care Subsidies for working poor) - 2,500 fewer children served, $5.3 million.

PUBLIC SAFETY: Eliminate 283 vacant correctional officer positions, $2.9 million.

Eliminate hiring and retention bonuses, $2.3 million.

PERSONNEL: Furloughs for six days, $48 million.

LOCAL AID: A 25 percent reduction for local jails, $6 million.

UNIVERSITY SYSTEM OF MARYLAND: Reduce annual grant and transfer fund balance ($20 million) to general fund, $30 million.

MORE PROPOSED CUTS

HEALTH: Reduce provider rate increase by 50 percent, $26.3 million.

o Pay chronic hospitals nursing home rate for ventilator patients, $3 million.

o A 25 percent cut for academic health centers for cancer and tobacco activities, $3.4 million.

EDUCATION: Federally approved delay of modified assessments, $2 million.

HIGHER EDUCATION COMMISSION: A 15 percent reduction to the Sellinger Aid Program for private colleges, $8.4 million.

o Reduce BRAC grants by 33 percent, $1 million.

o Serve 582 fewer people through the Educational Excellence Awards (need-based aid), $1.2 million.

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