Gov. Martin O’Malley took his first whack at trying to bridge a $700 million budget gap Tuesday by proposing a wide array of cuts to state government that include using generic drugs at psychiatric hospitals, reducing funding for stem cell research and cutting the advertising budget for state lotteries.
O’Malley’s proposals, which he’s set to present to the Board of Public Works Wednesday, come to $280 million. Much of the money used to fill the gap — $75 million — is additional Medicaid funding from the federal government. State officials said Maryland is eligible for the increased funding because of the state’s rising unemployment rate, which is currently about 7.5 percent.
How the state covers the remaining $420 million budget gap will be announced sometime before Labor Day and will have to involve pay cuts for state employees and reductions in state aid to local governments, O’Malley said.
In warning O’Malley and top elected officials two weeks ago about the $700 million budget gap in the state’s general fund, the General Assembly’s chief fiscal analyst Warren Deschenaux urged them to move quickly, saying the fund spent about $39 million a day and the longer the state waits the “proportionately deeper” cuts will have to be.
But the governor said he still needs to discuss possible cuts with labor leaders and county government heads before making other proposals.
“I don’t know another way to govern than to sit down with people and be honest about our shared reality, and in this case the shared pain that we all need to endure,” O’Malley said.
The General Assembly sliced about $50 million in state aid to Montgomery County earlier this year during the legislative session. Local officials, who are facing a projected $370 million shortfall for next year, warned that it will be difficult for the governor to find other areas to cut that won’t be extremely painful to residents.
“The low hanging fruit is long gone,” said County Executive Ike Leggett’s spokesman Patrick Lacefield.
In his first round of proposed budget maneuvers, O’Malley is proposing laying off 39 state employees and cutting 18 unfilled state jobs. About half of the job cuts would come from the state’s Department of Natural Resources.
In the next round of cuts, O’Malley said he’ll try to avoid “massive layoffs,” and added that he prefers mandating unpaid leave for state employees than job cuts.
O’Malley stressed that Maryland’s problems were not as bad as other states, like California, and noted that state is one of a handful to have maintained a AAA bond rating.
