Wednesday, November 18, 2009

Md. panel approves $362M in budget cuts/Join us at Goucher on November 19,0,5177596.story

Md. panel approves $362M in budget cuts

Plan includes elimination of 112 state jobs, closer of of the Upper Shore Community Mental Health Center in Chestertown

By Laura Smitherman |

Baltimore Sun reporter

2:07 PM EST, November 18, 2009

A state spending panel approved on Wednesday $362 million in budget-balancing measures proposed by Gov. Martin O'Malley and decided to continue with the closure of a state-run psychiatric hospital that employees had fought to save.

The actions taken by the Board of Public Works bring midyear spending reductions and fund transfers to the state's operating budget to about $1 billion. The three-member board is composed of the governor, Treasurer Nancy K. Kopp and Comptroller Peter Franchot.

This marks the third time that O'Malley, a Democrat, has been forced to make revisions in the $13 billion spending plan that took effect in July. By law, the budget must remain balanced.

"There are no easy decisions," O'Malley said. "None of them by themselves have been popular."

As part of the package of measures, O'Malley accounts for tax revenue from Constellation Energy Group's deal with a French utility and makes a number of state agency cutbacks while laying off nearly 70 state employees to close the latest budget gap that has opened as the recession lingers.

Midyear cuts have gotten so deep that some are raising concerns that the governor is breaching a cap on the amount of money that can be taken back once appropriated. Private colleges and universities, for instance, contend that a proposed $9 million cut to state grants they receive to support financial aid was too deep; the board reduced that amount Wednesday to $7 million.

In general, state law prohibits cuts above 25 percent of the budgeted amount. Administration officials have told those affected that they are relying on guidance from the state attorney general's office for justification of their decisions. Budget Secretary T. Eloise Foster called the cut to the college grants "legal" and "constitutional."

Another controversial item was the closure of the Upper Shore Community Mental Health Center in Chestertown. Lawmakers and union officials have criticized the proposal, and the health department had agreed to take a second look.

But the Board of Public Works decided Wednesday not to reconsider the closure in a 2-to-1 vote, with Franchot voting to take the proposal off the table. He backed a plan put forward by staff at the Upper Shore that would have reduced hospital staffing and beds to save money but would have kept the facility's doors open.

"I don't think this decision is the right one," Franchot said, expressing concern about patients getting care and about lost jobs.

In front of a room packed with supporters, Health Secretary John Colmers explained his decision to close the facility that provided inpatient treatment to psychiatric patients and a transition plan that would move the hospital's substance-abuse unit into a county-run program at the facility while bolstering community mental health programs.

In all, the budget measures calls for more than 100 state positions to be abolished, including about 70 that are currently filled.

Also, funds are transferred to the operating budget from other accounts with balances, such as the Maryland Injured Workers' Insurance Fund, the state's worker compensation agency.

"It's a little bit from everybody; the cuts are spread across the board," said Senate President Thomas V. Mike Miller. "And it's a harbinger of things to come."

Maryland has been caught in a revenue downdraft in recent years, as the recession made a major dent in tax receipts. According to a report from the comptroller's office this week, revenue collections so far this year are 7 percent lower than a year ago.

The state is expected to garner about $130 million in corporate taxes from the closing of Constellation's $4.5 billion deal to sell half its nuclear power business to Electricite de France. That revenue had not been accounted for amid uncertainty over whether the transaction would be cleared by state regulators.

The Public Service Commission approved the transaction with conditions last month, and O'Malley incorporates the tax influx in his budget-balancing plan.

The $7 million reduction from grants to private colleges and universities comes on top of nearly $7 million cut in previous rounds. The loss in aid money would be offset by additional stimulus funding under the federal Pell Grant program, according to the administration.

The grants are primarily used for need-based financial aid to Maryland residents, said Tina Bjarekull, president of the Maryland Independent College and University Association. And the reduction comes as more students are facing financial hardships and requesting additional help.

"We have all these students coming in saying, 'We need more; we need more,' and at the same time we're getting this cut," she said. "It's very hard on campuses." Bjarekull had objected to the level of cuts from $52 million in grants appropriated by the General Assembly for this year, and had raised concerns about exceeding the 25 percent cap on midyear reductions.

Michael Sanderson, executive director of the Maryland Association of Counties, said his organization also has been concerned about budget cuts exceeding the cap and plans to raise the issue in the legislative session that begins in January. Local aid to counties was slashed by more than $200 million in an earlier round.

Next year, O'Malley must close another gap of $2 billion. And Republicans including Del. Anthony J. O'Donnell, the House minority leader, have criticized the governor's one-time cuts, fund transfers and other "short-term gimmicks."

But some lawmakers defend O'Malley's proposals, saying his options are limited because he can't cut mandatory spending on education and other programs after the fiscal year has begun.

And some are hoping what has been a steady decline in revenue will soon come to an end. A report from the state's Bureau of Revenue Estimates in December is expected to be a key indicator.

"If we're not at the bottom, we're near the bottom," said Del. Murray D. Levy, a Charles County Democrat who sits on the House Appropriations Committee. "It seems more optimistic based on what the economists are saying."


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