$400 million cut from House budget

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ANNAPOLIS (AP) — The House of Delegates yesterday gave an initial approval to a budget with more than $400 million in cuts and spending transfers, hoping to create an adequate balance to weather any more fiscal downturns.

Republicans argued that the cuts were insufficient, and Democrats turned away amendments that would have cut the $31.2 billion budget further.

One of the most prominent proposed cuts was a plan to remove the entire $23 million in Gov. Martin O'Malley's budget for stem-cell research. The House voted to cut Mr. O'Malley's proposal to $15 million. A version of the budget passed by the Senate last week trims Mr. O'Malley's proposal to $5 million.

Delegate Tony McConkey, Anne Arundel Republican, said the fund already has millions of dollars that haven't been spent. "I think this is a reasonable amendment given our fiscal situation," he said.

Delegate John L. Bohanan Jr., St. Mary's Democrat, said the elimination of funding could wipe out the stem-cell program.

"One year of hiatus causes enough disruption to this program that we may as well opt out of it and not fund it ever again," Mr. Bohanan said.

House Minority Leader Anthony J. O'Donnell, Southern Maryland Republican, proposed deeper cuts: reducing transportation spending, eliminating 900 vacant state jobs and postponing an extension of health care to the uninsured.

He said the state needs to be prepared if the economy worsens and a referendum on legalized slot machine gambling fails in November.

"All of these programs are good ideas, ladies and gentlemen, but we can't afford it right now," Mr. O'Donnell said. "We still have a large structural deficit."

Delegate Norman H. Conway, a Wicomico Democrat who chairs the House Appropriations Committee, said the state has to balance difficult fiscal conditions with a responsibility to provide important services. The best way to do that, he said, is to "hold where we are with minimal increases."

"We do still have a deficit," Mr. Conway said. "The focus of our committee — the focus of the efforts that we have made — certainly have been a hold the line with minimal increases."

Delegates rejected an amendment by Delegate Jeannie Haddaway-Riccio, Talbot Republican, to repeal an extension of the sales tax to computer services that is set to take effect in July. Democrats said a variety of measures are pending to find another way to generate the $200 million that the tax is expected to raise.

The House accepted an amendment from Delegate John P. Donoghue, Washington Democrat, to restore $1 million to the University System of Maryland at Hagerstown. Mr. Donoghue said a cut in the bill could have forced the school to close.

The Senate has approved its version of the budget with state-controlled cuts and spending transfers totaling about $314 million. The House bill includes about $405 million in spending reductions.

When state special funds and federal funds are added, the Senate measure totals about $390 million, compared with $512 million in the House.

The House measure would leave a budget balance of about $248 million, with a total cushion of nearly $1 billion when the state's $739 million rainy-day fund is added. The Senate bill would leave a balance of about $158 million, leaving the state with almost $900 million to use if the fiscal situation worsens.

The House and Senate measures include a $25 million reduction to a proposed $50 million fund for the Chesapeake Bay that was approved in November's special session. Both chambers also want to defer the purchase of medevac helicopters, for a savings of about $60 million to the general fund.

The House and Senate differ on how to extend Medicaid for residents without health insurance, a plan approved in November. The Senate measure delays the expansion to parents by six months, until Jan. 1. The House is proceeding with the July 1 schedule.

The House committee voted to reduce the amount of money set aside to subsidize health insurance costs for small businesses. The governor's budget allocated $30 million for the subsidy, and the Senate cut it to $15 million. The House wants to cut the amount to $10 million in the first year.

The committee voted to save $100 million in general funds by transferring payments for Other Post Employment Benefits, which are a part of the state employee compensation package. The Senate voted to transfer about $50 million for OPEB.