- The Washington Times - Wednesday, July 22, 2009

BALTIMORE | Gov. Martin O’Malley outlined plans Tuesday to start bridging a $700 million budget gap, finding a significant portion of the first cuts in health care and higher education.

Mr. O’Malley discussed the plan a day before the Board of Public Works was scheduled to vote on more than $280 million in adjustments — the fifth time the board has made midyear budget cuts since Mr. O’Malley took office in 2007.

The governor said up to $750 million in budget actions will be proposed by Labor Day.

“We believe that this is the first time in our state’s history — certainly in our modern history — that general-fund spending will have declined over a three-year period,” Mr. O’Malley said, referring to the state’s roughly $14 billion operating budget.

Maryland is using $75 million in additional Medicaid money from the federal government to offset some of the budget gap.

The board also will be asked to approve $34 million in reductions in Medicaid payments to hospitals, nursing homes, managed-care organizations and other health care providers.

The plan also takes $40 million in savings from higher education. About $17.7 million will come from reducing funding for facilities renewal and operating expenses at the University System of Maryland. An additional $20 million will come from the system’s fund balance.

The governor said he didn’t think the money from higher education would jeopardize the maintenance of a tuition freeze for the fourth year in a row at public colleges and universities.

About 40 state jobs will be cut, and 18 vacant positions will be eliminated.

“We are striving in all of this to avoid the sort of massive layoffs that contribute to unemployment that we’ve seen other states have to revert to,” Mr. O’Malley said. “But having said that, when there are cases where the efficiency and the effectiveness of state government call for an elimination — an abolishment — of some jobs, sadly, that are already filled, we have to do that.”

Furloughs also will be possible later, but Mr. O’Malley did not elaborate on how future reductions will affect state employees.

“In the remaining cuts that we need to make, employee compensation has to be a part of closing this gap,” Mr. O’Malley said. “Local aid to all our counties and the city of Baltimore also has to be a part of closing this gap.”

Other noteworthy cuts to be voted on Wednesday include a $3 million reduction to stem-cell research, which will leave $12.4 million. About $5.5 million will come from the state lottery advertising budget. Another $5.8 million will be made up by reducing or eliminating spending on various state contracts, the governor said.

The cuts also shave $2 million off of the Chesapeake Bay 2010 Trust Fund, leaving $8 million.

Mr. O’Malley pointed out that funding for K-12 education will not be cut, as the state continues to preserve big investments there, largely at the expense of most other parts of state government.

By the time all the reductions are done by Labor Day, Maryland will have made about $4 billion in reductions and cut more than 2,800 mostly vacant positions since Mr. O’Malley took office.

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