Layoffs, Trims In Education, Services Coming

By John Wagner and Tim Craig
Washington Post Staff Writers
Thursday, October 9, 2008

The region's governors are preparing to propose hundreds of millions of dollars in budget cuts, including layoffs in Virginia and cuts to education and public safety in Maryland, in an early sign of the impact of the economic slowdown on government services.

Virginia Gov. Timothy M. Kaine will announce plans today to use money from the state's $1 billion reserve fund, lay off hundreds of state workers and announce other major cost-saving measures.

Maryland Gov. Martin O'Malley is weighing almost $400 million in potential spending reductions and will present at least $250 million of those next week to a panel with authority to make cuts while the legislature is not in session, aides said.

A memo prepared by O'Malley's budget secretary outlines about 100 possible spending reductions, which would affect a swath of state government, including higher education, community colleges and social programs that provide child-care subsidies and drug treatment.

In both states, additional rounds of reductions are being planned to cope with the longer-term impacts of a sluggish economy that has undercut anticipated collections of income taxes, sales taxes and other revenue that governments rely on for day-to-day operations. Revenue estimates, which were revised down before the high-profile troubles on Wall Street, could worsen further in the next months.

"Until we see some sign of rebound on the horizon, this is going to be a constant exercise in cutting," O'Malley (D) said in an interview, adding that his goal will be "to protect our priorities as best we can."

O'Malley said his administration would probably present another round of budget cuts to the three-member Board of Public Works in December, a month before his spending proposal for fiscal 2010 is due to the General Assembly.

Maryland is estimated to face a nearly $1 billion shortfall in its $15 billion general fund in fiscal 2010, which starts in July.

The proposals by Kaine (D) will be the first step in what he and lawmakers expect to be grueling rounds of cost savings over the next months. Administration officials say Virginia faces a shortfall of about $2.5 billion in its two-year, $77 billion budget for fiscal 2009 to 2010.

Other governments in the region are being strained by the downturn, too.

D.C. Mayor Adrian M. Fenty (D) has proposed eliminating 400 vacant government jobs, postponing a retirement benefits package for city employees and using accrued revenue in the bank accounts of city agencies to help close a $131 million gap.

Montgomery County Executive Isiah Leggett (D) has asked county department heads to make midyear budget cuts of $50 million to help cope with an estimated $250 million shortfall for fiscal 2010.

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