'Doing Nothing' Has Its Risks
O'Malley Says State Will Face Budget Cuts If Legislators Reject His Plan to Close Gap

By John Wagner
Washington Post Staff Writer
Wednesday, October 24, 2007

Gov. Martin O'Malley presented a grim warning yesterday of what would happen if lawmakers do not pass his plan to close a looming $1.7 billion shortfall by raising taxes and legalizing slot-machine gambling.

Maryland would lay off 10 percent of the state workforce. Funding for public education and teacher retirements would be frozen. Eight state parks would be closed. University and community college budgets would be cut by 10 percent, probably prompting tuition increases. And public health programs would be sharply reduced.

"There is a price to doing nothing," said O'Malley (D), joined at a news conference by Lt. Gov. Anthony G. Brown (D) and two dozen members of his Cabinet. "I do not believe that this is what the people of Maryland and their representatives will choose."

Afterward, some lawmakers accused O'Malley of overdramatizing the situation to build support for passage of his plan in a high-risk special session that starts Monday.

"I think Halloween's come early to Annapolis," said Sen. E.J. Pipkin (R-Queen Anne's). "All we saw today is scare tactics."

O'Malley's plan includes an overhaul of the personal income tax brackets that would raise the amounts paid by high-end earners but give other filers a modest break. It would reduce property taxes but increase sales, tobacco, vehicle titling and corporate income taxes.

Aides said yesterday that O'Malley also plans to introduce a health insurance package during the special session focused on expanding coverage through small businesses and increasing Medicaid eligibility for adults.

If lawmakers do not pass any new revenue measures in the special session, O'Malley will submit a budget in January that is balanced through spending cuts. But not all of the reductions would become reality if the legislature raises additional revenue by the start of the next fiscal year in July.

Some legislative leaders, as well as Comptroller Peter Franchot (D), have suggested that the legislature wait until the regular 90-day session starts in January to tackle the budget shortfall.

Franchot sent a letter yesterday to leaders of the General Assembly, questioning the timing and necessity of a special session.

"In my view, the volatility of the U.S. and Maryland economies, the absence of an immediate fiscal 'crisis' and the lack of detail about the plan could all combine to create a perfect storm of unintended consequences," Franchot wrote in a letter to Senate President Thomas V. Mike Miller Jr. (D-Calvert) and House Speaker Michael E. Busch (D-Anne Arundel).

Franchot also questioned the process O'Malley used to put his plan together and present it to the public.

"Mindful of its enormous ramifications, I must note that Governor O'Malley's plan was constructed in private, introduced gradually by press release, and the details have yet to be made available," wrote Franchot, a former delegate. "This makes review and evaluation of the plan next to impossible."

Asked about Franchot's letter, O'Malley said that "many of the things we have proposed . . . are things he has voted for in the past."

Busch and Miller had counseled O'Malley against calling a special session. And GOP leaders in both chambers have said they prefer to wait until January to take action.

Under the "do nothing" scenario that O'Malley presented yesterday, county governments would absorb some of the biggest cuts. In recent years, state aid to local jurisdictions has swelled to 40 percent of Maryland's roughly $15 billion general fund budget.

Without new state revenue, Montgomery County would lose more than $86 million in anticipated funding in fiscal 2009; the hit to Prince George's would be more than $153 million.

Other consequences of the plan would include canceling cost-of-living adjustments for state workers, closing two state police barracks, diverting funding for land preservation and reducing foster care grants.

"If this was January, you'd be looking at a budget that reflected that and a revenue package that the governor is asking the General Assembly to pass to offset that," Busch said. "I think his presentation is fairly accurate."

O'Malley's presentation of what he called a "cost of delay" budget was reminiscent of a "doomsday" spending plan that legislative analysts presented in June to help legislators come to grips with Maryland's budget problems.

Yesterday, the General Assembly announced the hearing schedule for O'Malley's proposals. It is posted on the legislature's Web site, http://www.mlis.state.md.us/.