Maryland’s Board of Public Works on Wednesday approved nearly $200 million in cuts to the state’s current operating budget, including a 2 percent reduction for all state agencies and millions of dollars in additional cuts in higher education and services to the developmentally disabled.
The reductions are part of an effort by outgoing Gov. Martin O’Malley (D) to shrink a looming shortfall before he is succeeded by Gov.-elect Larry Hogan (R) on Jan. 21. They were made during O’Malley’s final appearance as governor at the monthly Board of Public Works meeting.
The board also approved seeking nearly $40 million in savings through voluntary-retirement incentives and the elimination of vacant positions, proposals that officials said could affect up to 1,000 slots.
O’Malley plans to propose an additional $161 million in cuts and transfers when the General Assembly convenes next week, spokesman Ron Boehmer said. In all, the cuts would erase a shortfall of just over $400 million in the current fiscal year’s $16 billion operating budget.
The across-the-board reduction to state agencies amounts to $113 million. The board trimmed an additional $18 million from higher education and $7 million from local community colleges. The package does not include layoffs.
Funding for the Department of Health and Mental Hygiene will be reduced by $25 million as a result of the 2 percent across-the-board cut and by an additional $38 million in other cuts. The Department of Public Safety and Correctional Services will lose $24 million because of the government-wide cuts.
William E. Kirwan, chancellor of the University System of Maryland, said he was “reeling” over what will amount to about $40 million in cuts. That, he said, is five times the amount the system was told last month to prepare for.
“We are shocked by the magnitude of the cut,” Kirwan said. “It’s really upsetting, and we’re trying to figure out how we are going to deal with it. . . . It will be a hardship on our students, and it will greatly compromise our ability to serve the state when we want to see the economy grow.”
The board voted to increase payments to private contractors who care for the developmentally disabled by 2 percent instead of a planned 4 percent. Laura Howell, executive director of the Maryland Association of Community Services, said the reduction would affect the pay of front-line workers and would be “a devastating blow” to them and the people they serve.
Patrick Moran, president of the Maryland chapter of the American Federation of State, County & Municipal Employees, said the union, which represents 30,000 state government and highereducation employees, appreciated that O’Malley focused his cuts on vacant positions and retirement incentives and not on eliminating jobs.
“None of these things are things that we enjoy,” said O’Malley, who sits on the three-member Public Works Board with Comptroller Peter Franchot (D) and Treasurer Nancy K. Kopp (D). “This is a time when we have to do some rebounding and to make some tough choices.”
The board is authorized to make budget cuts when the General Assembly is not in session. The three members described the cuts as needed to help preserve the state’s AAA bond rating.
If the General Assembly approves the $161 million in fund transfers and additional budget cuts after it convenes next week for the start of its 90-day legislative session, Hogan will still inherit a projected shortfall of about $750 million for the coming fiscal year, which starts in July.
The budget proposal for fiscal 2016 is due to be presented to the General Assembly two days after Hogan takes office. The incoming governor has said major cuts may be needed to bring spending under control.
At the board meeting Wednesday, Kopp and Franchot praised the governor for taking action. Franchot, who has been a frequent critic of O’Malley’s, described the cuts as a “positive step” that will leave Hogan in a more tenable situation.
The state’s budget secretary, T. Eloise Foster, said the cuts will “ensure that the state’s books are in order and improve the long-term budget outlook.”
Hogan spokesman Erin Montgomery declined to comment on O’Malley’s plans.
Del. Gail H. Bates (R-Howard) said she was glad that O’Malley took steps to close the budget gap. “I think it shows some integrity on his part, cleaning up a mess from under his watch and not leaving it to the incoming governor.”
O’Malley, who is weighing a run for president, said Maryland’s budget shortfall was attributable in part to spending reductions imposed by the federal budget sequestration in 2013.
In other action Wednesday, the board voted to buy three parcels of land in Montgomery County, one commercial and two residential, as part of the plan to build a light-rail Purple Line in Montgomery and Prince George’s counties.
Hogan has expressed doubts about whether the project makes fiscal sense and has not said whether he will advance it, and Franchot, a Purple Line supporter, questioned the wisdom of buying the land without assurances from Hogan. But state transportation officials said that failing to move forward could be misinterpreted by bonding firms and the public, and the board approved the purchases.
John Wagner contributed to this report.