- The Washington Times - Thursday, July 23, 2009

ANNAPOLIS | The Board of Public Works approved about $280 million in spending reductions and fund transfers Wednesday, forcing health and higher education officials to survey a still-smoking battlefield of budget cuts to grasp how they will affect services.

There are more cuts to come as Gov. Martin O’Malley’s administration aims for about $750 million in savings by Labor Day to adjust for what he described Wednesday as a “very deep recession.”

A significant portion of the cuts approved Wednesday fell on Medicaid providers, raising the concern that some could decide to stop participating in the program for the poor.

“We’ve tried to be judicious in understanding the impact of these cuts on the various provider groups individually and knowing that at some point we may get to the point where the providers, who are not required to participate in the Medicaid program, may decide not to,” Maryland Health Secretary John Colmers told the board.

The cuts include $24.2 million by establishing limits on Medicaid use to pay for hospital stays. The state also made up $23.1 million by reducing Medicaid rates to nursing home facilities by 2 percent, and an inflation adjustment for community health providers will be eliminated to save $13.3 million.

“I think all Marylanders will be impacted by these cuts,” said Joseph DeMattos, president of the Health Facilities Association of Maryland, whose members care for about 20,000 people in assisted-living facilities. “I think all of us are working to get our arms around what will be the impact of these cuts.”

Maryland is using $75 million in additional Medicaid money from the federal government to offset some of the budget gap. The state is eligible for the money because of its 7.2 percent unemployment rate.

The Board of Public Works includes Mr. O’Malley, Comptroller Peter Franchot and Treasurer Nancy K. Kopp. The board has the authority to make midyear budget reductions when the Legislature is not in session. It’s the fifth time the board has made midyear budget cuts since Mr. O’Malley took office in 2007.

The board’s action 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 system’s Board of Regents has scheduled an emergency meeting Thursday to discuss the potential impact of the reductions.

“What it’s going to mean is some sections probably will be eliminated for classes,” said Patrick Hogan, associate vice chancellor for the system.

While the cuts are not expected to endanger a tuition freeze for the fourth consecutive year, Mrs. Kopp said she believes it’s time “to look at moderate tuition increases.”

“You do get to a point where you begin to sacrifice the quality of what the students are investing in with their tuition dollars,” Mrs. Kopp said.

Mr. Franchot, noting that it was the fifth time the board has had to make budget cuts, said the action was becoming “a dreary summertime tradition.”

“The truth is that recovery is still a long way off and there’s still other shoes left to drop in both the national and state economies,” Mr. Franchot said.

Mr. O’Malley said the state had no choice but to make difficult adjustments in wake of declining revenues.

“The choices we make, however difficult, are choices that will also allow us to come through the other side of this recession sooner than most other states in the union,” Mr. O’Malley, a Democrat, said.

The state’s Board of Revenue Estimates will revise revenue estimates in September.

Preliminary figures indicate the state also is facing a $1.6 billion deficit for fiscal 2011, the budget Mr. O’Malley will submit in January.

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