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Furloughs ordered for Md. state workers

December 16, 2008

ANNAPOLIS (AP) -- Gov. Martin O'Malley, faced with an unexpectedly fast and steep drop in revenues, ordered furloughs for Maryland employees Tuesday on a day when serious budget worries were amplified both for this fiscal year and next.

State officials on Maryland's Board of Revenue Estimates announced that the state's budget hole for the current fiscal year more than doubled over previous estimates to about $415 million. Even worse, estimates of next year's deficit ballooned to roughly $2 billion, nearly doubling previous estimates and painting a dark budget picture.

"I think what we have to brace ourselves for is that there will be virtually no increases to anything and decreases to quite a number of things," O'Malley told reporters after the new budget numbers were released.

The furloughs, which will range between two and five days, affect state employees differently based on how much money they make. The furloughs are expected to save an estimated $34 million in the current fiscal year.

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About three weeks ago, O'Malley considered the furloughs to help make up for what was then believed to be about a $200 million deficit for the current fiscal year. But dropoffs in Maryland's individual income tax, the corporate income tax and the state's sales tax increased this year's shortfall.

"This is not a garden-variety recession," said Comptroller Peter Franchot, who is one of three members on the board, along with Treasurer Nancy Kopp and T. Eloise Foster, the O'Malley administration's budget secretary.

O'Malley, a Democrat, described the downturn as "fairly unprecedented" in terms of how quickly it has happened, and he noted that "the road ahead is going to be very difficult" as the state works to continue balancing the books with budget cuts.

The governor signed an executive order for the furloughs after negotiating with labor leaders over the past few weeks. The furloughs affect about 67,000 of the state's 80,000 employees.

The number of furlough days will vary depending on salaries, with the highest-paid workers taking up to five days off. The governor said he already has written a check for five days' pay on his annual $150,000 salary.

Employees who make less than $40,000 will not be required to take time off, but they will still lose two days of pay. The pay cuts will be spread out over the remainder of the fiscal year. Those who make more than $40,000 will get at least two furlough days along with the pay cuts.

The plan will affect about 67,000 of the state's 80,000 employees. Workers in emergency health and public safety positions will stay on the job.

It's the first time a Maryland governor has ordered furloughs since former Democratic Gov. William Donald Schaefer used them in 1992 to address another budget crisis.

The furloughs announced by O'Malley only affect executive branch employees.

House Speaker Michael Busch and Senate President Thomas V. Mike Miller are urging that the furlough plan ordered by the governor be followed in the legislative branch. They asked legislators to return their corresponding salary portions, but they can't force them.

O'Malley pointed out that 85 percent of the state's budget is spent on health, education and public safety, and all will be affected.

O'Malley said an expansion of health care to the uninsured will likely be delayed, and money for a $20 million fund to clean up the Chesapeake Bay will take further hits. Reductions in the planned Geographic Cost of Education Index, which helps areas in the state where education costs more, likely will be needed.

But the governor saw a glimmer of hope in discussions about a federal economic stimulus package to help turn things around.

Nevertheless, the state's Board of Public Works, which includes O'Malley, Franchot and Kopp, will need to make another round of cuts to the current budget year in January.

Meanwhile, the state's Spending Affordability Committee voted to recommend that spending only increase by seven-tenths of a percent. That would be the lowest amount by far since the committee was created in 1982 to make budget recommendations that reflect the current condition of the economy.

The lowest amount of growth recommended by the committee in past years was 2.5 percent.

The O'Malley administration estimates it has reduced spending by $2.2 billion since the governor took office in January 2007. The state also has eliminated more than 1,500 state positions.

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