O'Malley confident on budget gap

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ANNAPOLIS -- With lawmakers preparing for cuts if new state revenues are not found, Gov. Martin O'Malley said he is confident the state "will choose to invest in solutions that protect our quality of life."

In other words, said the governor yesterday, Maryland residents will have to deal either with new taxes or face reductions in services and public works projects, given the looming $1.5 billion budget shortfall.

"We are going to provide the leadership that puts the choices before the representatives of the people of our state, between whether we want to allow ourselves to be taxed by circumstance and have our quality of life degraded, or whether we want to come together to invest in solutions," Mr. O'Malley said.

As an example, the governor spoke of the state's gas tax, which hasn't been raised since 1992, to help pay for needed transportation projects.

"We are allowing people to be taxed by the circumstance of gridlock and congestion and traffic, which actually takes far more dollars out of their wallets every single year than whatever is currently paid in a gas tax that hasn't been adjusted in many, many years to keep pace with those investments," he said.

The governor spoke in response to a letter written by Senate President Thomas V. Mike Miller Jr. and House Speaker Michael E. Busch. In the letter to Warren Deschenaux, who is director of the Office of Policy Analysis, Mr. Miller and Mr. Busch requested "information and recommendations for potential reductions to a level necessary to address the structural deficit in the event additional revenues are not secured."

"As we are asked to begin the difficult process of resolving the deficit, this information will be crucial to fully understanding the nature of our problem and the nature and effect of potential solutions," the letter said.

The letter, dated June 5, also asks for information "on the effect of each recommendation on impact to Maryland residents including reduction in staffing levels, programs, or increased cost of services to the public."

The letter noted that past fiscal challenges in the state have led to reduced services for residents, including closing public parks, reductions at nursing homes and closing state police barracks.

"Additionally, these challenges have often severely impacted the state work force and have included increased work hours without pay, furloughs and major reductions in the work force," the letter said.

Mr. O'Malley said he thinks Mr. Miller and Mr. Busch were taking a prudent step to prepare for contingencies, because the state is required by law to have a balanced budget.

"If we are unable to do that through some sort of mixture of efficiencies of budget reductions and modernization of revenue streams, then we're going to be left to do it with cuts only," Mr. O'Malley said.

Last month, Mr. O'Malley directed his Cabinet to search for $200 million in spending cuts as an initial step to address the structural deficit, which is the difference between incoming revenues and projected expenses for next year.

Mr. O'Malley said that Cabinet secretaries came back with suggestions last Friday, and that the suggestions are under consideration.

"Some of it will involve layoffs," the governor said. "Some of it will involve elimination of positions, and those are all the things that we are looking at and all of the things that we are doing to wrestle with this structural deficit."