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O'Malley turns back Ehrlich's challenge

Former Republican Gov. Robert L. Ehrlich Jr. conceded the governor's race in a brief speech to his supporters at the Maryland State Fairgrounds.

On the trail, O'Malley argued that Maryland's economy has weathered the recession better than most states. But despite O'Malley's push to fully fund public education and promote biotechnology, cybersecurity and other emerging sectors, the state's unemployment rate, though still 2 percentage points below the national average, has inched upward in recent months, to 7.5 percent.

A second term for O'Malley could give the ambitious governor a larger national profile and a shot at moving ahead on his spending priorities if the state's fiscal health improves. Over the next two years, however, projected budget shortfalls could quickly pierce any victory euphoria.

Within weeks, the governor will have to focus on the upcoming legislative session, where he and lawmakers must close a shortfall of more than $1 billion.

O'Malley's first term has been dominated by budget cuts, and he is likely to have to make additional reductions to health care, social services and other programs favored by many of his supporters. The governor's next budget is due to lawmakers in mid-January. On the trail, he pledged that his next budget would not include new taxes and would protect education funding.

House Majority Leader Kumar P. Barve (D-Montgomery) said he expects O'Malley to stay the course of "liberalism on a budget," pursuing initiatives with minimal price tags. He offered the example of a greenhouse gas reduction law, passed last year, that costs little to implement.

"Toward the end of his next term, he will have the ability to implement an agenda he hasn't been able to afford," Barve said.

Neither candidate in the O'Malley-Ehrlich rematch offered many specifics about what they would do with a second term. Several lawmakers and lobbyists interviewed recently confessed they don't have a good sense of O'Malley's agenda heading into January.

O'Malley faces pressure from liberal interest groups to incorporate their agenda. One grassroots group has been lobbying to raise the state alcohol tax to fund health programs.

Business groups will continue to advocate for an increase in the gas tax or other means to advance stalled road and transit projects. To date, O'Malley has resisted tax increases even as he supports ideas that would require new money to become reality.

Proponents of same-sex marriageare certain to make another push in January. O'Malley has not campaigned for legalization, but said he would sign a bill if one makes it to his desk. A second term also presents an opportunity for O'Malley to play a more active role in crafting education policy.

Beyond Annapolis, as one of a dwindling number of Democratic governors, O'Malley will bump up in the pecking order of national party figures. "There's a lot of selling going on right now and O'Malley is a buy," said Raymond Glendening, political director of the Democratic Governors Association.

With nearly half of the nation's Democratic governors likely to be newcomers come January, O'Malley is widely seen likely to be as the group's next chairman.

"Now, where does he go from here?" said Trevor Parry-Giles, a communications professor at the University of Maryland. "O'Malley is always going to bump up against the notion that he would have had to have done something really awful to lose in such a traditionally solid, Democratic state, but Ehrlich was a better opponent than many people were probably counting on."

Staff writers Ann Marimow and Fredrick Kunkle contributed to this report.

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