O'Malley Pitches $281.5 Million in Md. Cuts, Shifts

Aid for Public Universities on List of Trims

Maryland Gov. Martin O'Malley on Tuesday proposed cutting aid to public universities, rolling back rates paid to nursing homes and community care providers and cutting advertising for the state lottery.

The reductions were part of a $281.5 million package of spending cuts and fund transfers that will be considered by a state panel Wednesday. The amount, O'Malley (D) acknowledged, is less than half of what is needed to close a projected $700 million budget shortfall that has emerged just three weeks into the state's new fiscal year.

The governor said more time is needed for consultation with county and labor leaders before he proposes another round of reductions that will include cuts in state aid to local government and possible furloughs of state workers.

"Employee compensation is going to have to be a part of closing this gap," O'Malley said, citing the sluggish economy that has severely undercut tax collections in states across the nation. O'Malley said he would try to avoid the "massive layoffs" that some other governors have proposed.

The actions proposed by O'Malley would eliminate only 58 jobs, 39 of them currently filled, from the state's roughly 80,000-member workforce.

The governor, who briefed reporters on his plan Tuesday afternoon, was harshly criticized afterward by Republicans for not acting more boldly.

"It appears to me to be inadequate and avoids the difficult decisions that need to be made," said House Minority Leader Anthony J. O'Donnell (R-Calvert), pointing to projections showing an even larger budget shortfall next year. "We are in dire financial straits, and the governor continues to fail to act."

O'Malley pledged to protect K-12 education funding in the months ahead, saying he did not want to harm "the best public school system in America."

But the state's higher education system was not similarly spared in the proposal. O'Malley proposed about $40 million in reductions to colleges and universities, most of them affecting the University System of Maryland, which is budgeted to receive more than $420 million in state aid this year.

Though the governor repeatedly referred to his $281.5 million list of reductions as "budget cuts," it includes several fund transfers designed to bolster the state's $13 billion operating budget, known as the general fund, in which the shortfall exists.

The single largest savings is achieved by replacing $75 million in previously budgeted state funds for Medicaid with federal stimulus dollars for which the state only recently qualified. Under federal rules, Maryland was entitled to the additional money for Medicaid, the subsidized health insurance program, due to an increase in the state's unemployment rate.

A budget aide said additional cuts to Medicaid would probably have been necessary without the new federal money.