'Doomsday' Budget Dictates Tough Cuts

Education funding and other aid to Maryland's localities has swelled in recent years to more than 40 percent of the state's general fund. That assistance would take a big hit under the scenario presented yesterday. Montgomery County would lose more than $155 million in anticipated aid -- a 24 percent reduction. Prince George's would lose more than $90 million -- an 8 percent cut.

David Bliden, executive director of the Maryland Association of Counties, said he considered the budget presentation "a reality check" but is hopeful lawmakers will craft a budget fix that is fair to local governments. Most counties would have to raise property taxes significantly to make up for the cuts in teacher retirement costs and other state aid, he said.

"By shifting responsibility to the counties, all that you're doing is shifting revenue-raising responsibility," Bliden said. "The counties are not going to stop paying teachers' retirement costs."

Maryland and its counties share the cost of public education, but the state pays the full amount for teacher pensions -- an arrangement that legislative analysts suggested should be reexamined.

Maryland's budget problems are years in the making, but lawmakers point to two decisions largely responsible for the position they are in today: an income tax cut passed nearly a decade ago that saps about $700 million a year from the treasury; and Maryland's landmark 2002 Thornton education program, designed to pour tens of millions of dollars into jurisdictions that a statewide commission said had historically been underfunded. Lawmakers never reached an agreement on how to pay for the $1.3 billion program.

A booming economy, coupled with fund transfers that shortchanged land preservation and transportation programs, allowed the state to get through the four-year tenure of Gov. Robert L. Ehrlich Jr. (R) without addressing underlying budget problems.

O'Malley's first budget, which lawmakers passed largely intact in April, was balanced only by draining nearly $1 billion from the state's "rainy day" reserve fund.

Yesterday's presentation suggested that relatively few easy fixes remain.

Among those taking a hit would be state employees, whose planned 2 percent cost-of-living increases would be canceled, saving $62 million. A prescription drug program for state retirees eligible for Medicare Part D would also be cut, saving the state an estimated $34 million and providing former workers with federal benefits that are less generous.

Other suggested reductions would cut across state government and vary greatly in size and impact.

Analysts suggested delaying $3 million in funding for a drug-abuse treatment initiative that is projected to help 1,200 people. They suggested canceling a state program that seeks to help young, unwed fathers, at a savings of $772,000.

The selective early release of 125 elderly and nonviolent inmates, meanwhile, could save $500,000, lawmakers were told.

And the state could save $270,000 by shifting the responsibility for purchasing mosquito insecticide to municipalities and counties. But, the briefing material noted, the move could come at a cost: "If municipalities and counties do not participate, there could be an increase in the mosquito population."