Is anybody really going to notice the state budget cuts likely to be made Wednesday at the Board of Public Works?
From a list of $396 million in potential reductions prepared by his budget secretary, Gov. Martin O’Malley is prepared to propose about $250 million, and then take another $200 million in a projected surplus to make up for the declining revenues predicted early last month.
With these reductions, the state is getting closer to spending less than it did last year, but not quite yet. So these are still “cuts” in increased spending.
The most dramatic proposed spending reduction – six-day furloughs for the more than 75,000 employees of state government and the university system that would save $48 million – is being delayed until O’Malley can “speak with our partners in government,” such as the public employee labor unions who supported him. Same goes for cuts in funding to local school boards, which would bear a $38 million reduction in their state aid.
Big hits to higher ed
The biggest hits seem likely to fall on higher education – $30 million from the university system, $16 million from community colleges and $8.4 million from state aid to private colleges and universities. This comes at a particularly bad time for community colleges, which often see an upswing in enrollment during bad economic times as the unemployed and other retool their skills.
Will tuitions go up? Who can forget when Gov. Robert Ehrlich Jr. made even more substantial cuts to higher education, as O’Malley has often reminded us?
The other spending trims do not affect the great mass of citizens in very visible ways – no shutdown of Motor Vehicle Administration offices, no cuts for the moment in library hours.
Health care providers who long lobbied for increases in their paltry Medicaid reimbursement rates will lose half the increase they won this year – $26 million. Community mental health services take a $3.6 million hit, and 80 criminals who likely became offenders to feed their drug habit will not get substance abuse treatment – $1.1 million.
Some of the cuts are actually fairly easy, since they represent money that wasn’t likely to be spent on programs where caseloads had gone down (foster care, $1 million) or programs like the veterans health initiative, that had a delayed start.
No whining
Previous reductions in spending increases had led to much moaning about how hard it was to cut the budget, but the economy has turned so suddenly sour that O’Malley’s tone has changed to recognize the pain in households and businesses all around.
“This is an ugly time and these are painful decisions,” O’Malley said Thursday. “I really wish there were a way to spare these painful cuts.” But “there are decisions being made by every family as every family in our state tightens their belts, there are decisions by every business to tighten their belts.”
Still O’Malley rejected the notion that these spending reversals should have come sooner, saying no economists or public officials “were predicting this unprecedented collapse on Wall Street.”
True enough, but the estimates of $432 million less in revenues a month ago was based on the economy at the time, not the financial distress we’ve experienced in the last few weeks. As families and businesses cut back further on spending for the holidays and beyond, those revenue figures are likely to turn even worse.
O’Malley also is using the dim budget picture as a way to pump up support for slots constitutional amendment on the ballot this fall. Talking about furloughs for state employees should encourage them and their families to vote for slots, though none of that money will come in time to prevent the furloughs.
Nope to OPEB
The largest single item on the list of “sensitive budget reduction proposals” will affect no one immediately. That’s $52 million for “no additional OPEB contribution,” the acronym for other post-employment benefits.
This is money being socked away for the benefits of future state retirees, mainly health insurance. The Government Accounting Standards Board is now requiring state and local governments to put money aside for this, just as they do for pensions. But OPEB is an easy target for budget cutters since if you don’t spend the money this year, the bill won’t come due until the officials are long gone.
Len Lazarick is the State House bureau chief, [email protected].
