- The Washington Times - Thursday, March 12, 2009

ANNAPOLIS | Maryland’s budget crisis deepened Wednesday with the announcement that revenue for this year and 2010 is expected to be roughly $500 million less than projected.

The new figures sent Gov. Martin O’Malley, a Democrat, back to his desk to find ways to avoid laying off roughly 700 state employees and meet other demands.

The numbers were released by the state’s Board of Revenue Estimates and put the projected shortfall at $1.1 billion. The roughly $500 million is about twice as much as projected about three months ago.

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In addition to the layoffs, Mr. O’Malley also is reconsidering spending projects that were thought to be safe because of an infusion of money from the federal stimulus program, including a freeze on undergraduate tuition at state universities.

“It’s all going to be very painful, and one day we’ll reach the bottom of this national economic downturn and we’ll start coming back,” he said during a meeting of his budget committee.

The announcement comes just days after Mr. O’Malley pledged to save public education by maintaining the tuition freeze and by increasing state funding for community colleges by 5.5 percent The erosion in tax collections also comes after the Maryland’s Department of Labor, Licensing and Regulation announced that unemployment in the state increased to 6.2 percent in January, up from a revised December rate of 5.4 percent and up from 3.4 percent in January of 2008.

In his spending plan for fiscal 2009 and 2010 released in January, Mr. O’Malley had closed a $2 billion budget gap, partly through the use of the stimulus money.

“These devastating figures speak for themselves,” said Comptroller Peter Franchot. “They provide yet further confirmation that this country is in the throes of the worst economic tailspin since the Great Depression.”

T. Eloise Foster, secretary of the Department of Budget and Management, said the 2009 budget will be balanced with the help of the federal stimulus funds and further budget cuts are not planned this year. However, the $516 million gap will exist for fiscal 2010.

Mr. O’Malley considered laying off the state employees early in the year to save roughly $30 million.

A reduction in teachers’ pensions and a 1 percent pay cut to state-employee salaries also are being considered on the table.

Mr. O’Malley said “it is my hope” to avoid the layoffs, but declined to give more details until he and his economic team consider to offset the crisis.

Senate President Thomas V. Mike Miller Jr., Prince George’s Democrat, said that ending the tuition freeze is one of many options the governor and the legislature will have to consider.

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