Maryland Gov. Martin O’Malley proposed cutting more than $1 billion from state programs, laying off 44 state workers and borrowing nearly $1 billion slated for ongoing capital projects to help close Maryland’s $2 billion budget deficit.
O’Malley outlined his $12.7 billion budget Tuesday afternoon, ahead of its full introduction to the General Assembly on Wednesday morning.
The proposal shrinks the state government by 202 positions through layoffs and eliminating empty jobs — bringing the total number of state jobs that O’Malley has axed to about 3,500. He said most of the layoffs would be in higher education. He also proposed furloughing state employees for 10 days again this year as well as freezing their salaries.
The budget also relies on $913 million from the state’s capital funds, as well as $389 million in federal stimulus money and $85 million in slots revenue.
State agencies: $375 million
Local aid: $330 million
Capital projects (shift to bonds): $163 million
Employee compensation: $146 million
Budget highlights
$189 million increase for public schools
$20 million for new Job Creation Tax Credit
$20 million for Bay Restoration Fund
$3.2 billion capital budget to support more than 20,000 construction jobs
In-state tuition increase not to go up more than 3 percent
Fund health care coverage for 820,000 low-income children and adults
O’Malley said the state would restore funds taken from the capital budget, which is mainly used for transportation and construction projects, with the sale of bonds.
“This will not be the first recession that lasts forever,” O’Malley said when asked how the state planned on paying back the bonds — with added interest — over the next several decades. He said he expects the state will bounce back from the recession and have no problem paying back the bonds.
“As we come to the end of this storm … [making] some one-time transfers … I believe is more fiscally responsible than doing things that damage one’s ability to create jobs and protect the conditions that allow for job creation,” he said.
The $389 million in federal stimulus funds O’Malley is counting on is part of the U.S. House of Representatives’ health care bill. If that provision — which matches state Medicaid funding with federal money — doesn’t pass, lawmakers would have to find new revenues, O’Malley said.
The governor said he does not have a fallback plan if the state doesn’t receive the second surge of stimulus funds.
O’Malley’s budget plan also includes $99 million in additional funding for K-12 education, $20 million in spending for Chesapeake Bay restoration and another $20 million to offset a $3,000 tax credit for every in-state employee businesses hire.
Included in the $3.2 billion capital budget is $250 million in public school construction, $249 million for Bay restoration projects and $17.5 million for a new youth detention center in Baltimore.
O’Malley said his “top three priorities” remain “jobs, jobs and jobs.”
