Gov. Harry Hughes today announced $52 million in cuts in this year's state budget, including hiring freezes and some sharp trims in services, to compensate for a sudden drop-off in state funds caused, he said, by the national recession.
The reductions, which include an average spending cut of nearly 2 percent in state departments, usher in what Hughes described as a period of "belt-tightening" after several years of huge surpluses that brought tax cuts and large increases in state aid to Maryland citizens.
"I don't see that in the making again," the governor said today of the tax reductions of his first year in office. "The problem now is keeping our head above water."
Hughes, who had surpluses of $300 million and more to work with in his efforts to resolve problems during his first 18 months in office, now has to contend with the outrage of those affected by the cuts.
Even as Hughes outlined the austerity measures, a parade of witnesses was appearing before a legislative committee to protest his administration's new limits on state Medicaid funding, proposed because of a projected deficit of $50 million in state funding for the program this year.
The oversight committee later unanimously voted to approve the new regulations, which would stop Medicaid funding for poor persons after 20 days of hospitalization and curtail reimbursements for several other hospital costs.
The regulations, the first limits applied to Medicaid funding for hospital visits in the state, will take effect Jan. 1, and state officials say they will save $11 million this fiscal year.
The governor was defensive at times during a press conference today used to explain the budget reductions. "It would have been easy for me to take the meat ax approach," and insist on across-the-board agency cuts, "but we've worked very hard to be selective and try to minimize the effect," Hughes said.
The cutbacks announced by Hughes were not as severe as he indicated they might be two months ago, when he ordered state departments to plan for reductions of up to 3 percent this fiscal year because of falling state revenues.
In September, state officials said that collections from the state income tax, the state sales tax and other funding sources were falling well below the amounts predicted when the current state budget, which went into effect July 1, was being prepared.
Declaring then that "the era of large surpluses is coming to an end," Hughes said he intended to cut $50 million from the current $5 billion budget and had ordered state departments to plan for additional cuts in the next fiscal year's budget. Without these actions, Hughes said, the state would face a $127-million shortfall in funds by June 1982.
In the last two months, state officials have been able to avoid real cuts in programs, however, by finding $34 million in funds that were included in the budget, but turned out not to be needed. For example, it was discovered that the cost of fuel for state vehicles had been overestimated, and $8 million budgeted for it could be used elsewhere.
Hughes thus reached his $50-million reduction figure by making only $17.6 million in real cuts in programs and expenses, an average of a little more than half the 3 percent amount the departments were told to plan for.
Most of the savings will be gained by a freeze on vacant job positions that are considered nonessential. In the Department of Public Safety and Correctional Services, for instance, $2 million will be sliced from the budget by putting off the hiring of employes for new state prisons until the facilities are actually open, and by not replacing some employes who have left existing jobs.
Large reductions also have been made in some departments by putting off maintenance of buildings and vehicles, or cutting back on supplies. Hughes cut the budget of his own office by $88,174 -- 3 percent -- by freezing three vacant positions, eliminating summer interns and some publication subscriptions, and foregoing the rental of a limousine for $4,000.
However, some substantive cuts have been made in state programs, and Hughes said today, "I don't think you could cut more than we did without severely hurting services."
In the Department of Health and Mental Hygiene, $650,000 was cut in funding for local health departments. A mental health program for hearing-impaired children, planned to start this year, was eliminated entirely, saving $109,762.
The Department of Human Resources, which manages many state social programs, did not reduce its budget, but had to cut a total of $1.1 million to meet it because of decreased funding from federal programs. As a result, day-care services were cut by $493,000, public-housing grants were reduced by $109,000 and grants to legal-services programs for the poor and disabled were cut by $315,000.
Largest budget reduction was handed to the University of Maryland, which cut $4.9 million by deferring hiring and maintenance, reducing funds for renovating new grant money from other sources.
"There will be some effect [from the cuts], there's no question about that," Hughes said today.
He said, however, that "you could count on your hands" the number of state employes who would be laid off because of the fiscal measures.
Hughes, who is now at work on the budget for the year beginning July 1, said that while the cuts announced today "have alleviated some of the burden" caused by the drop-off in state funds, "the need for belt-tightening is still very much with us" and the new budget "must of necessity be extremely tight."
He said that when the new budget is delivered to the legislature in January, some agencies will have no more money to spend in the next fiscal year than they have now, despite inflation.