The Maryland Board of Public Works (pictured above), consisting of Governor Martin O'Malley, Comptroller Peter Franchot and Treasurer Nancy Kopp, met last week to make cuts to the state's budget.
The cuts total either $300 million, $297 million, $348 million, $345 million or $280 million depending on where you get your news. They are necessary to address smaller than expected tax receipts - a reflection of the slowing economy and falling home prices. The cuts are certainly a precursor of more to come as the state struggles with a projected $1 billion deficit in the coming year.
The cuts that were approved span a wide variety of programs and functions with some setting the stage for the deeper cuts to come next year while others are one-time adjustments or changes in accounting which don't appear to have any real effect on state expenditures. Let's take a look at some of the cuts.
About $16 million was cut from the University System of Maryland - a 1.5% reduction. While this won't result in tuition increases this year it's almost certainly a harbinger of more cuts to come in next year's budget. Another $6 million comes from reduction in grants to private colleges and universities in the state. More than $8 million comes from reduced subsidies for Community Colleges.
About $21 million in savings will come from reductions in this year's rate increases for certain health care providers with another $22 million of 'savings' coming from using special funds rather than the general fund for some state Medicaid expenses.
About $26 million in savings will come from abolishing 790 vacant positions including 181 in the Department of Health, 200 public safety positions (including 100 correctional officer positions), 100 positions in the Department of Human Services and 76 positions in the Departments of Natural Resources, Environment and Agriculture (these include 31 Natural Resource Police positions.)
In the category of funny money, $20 million was claimed as a savings by deferring a payment from the General Fund to the Transportation Fund for the ICC. Another $46 million was 'saved' by eliminating a payment on the estimated $15 billion liability the state has for health benefits for retired employees. Almost $7 million in 'savings' come from deferring spending on major IT projects and about $3 million in 'savings' comes from using the proceeds from the Regional Greenhouse Gas Initiative auctions in lieu of general funds.
The one-time savings of almost $80 million are good, but will do little to help with cutting next year's budget. The same is true of the $40 million in fund swaps. They are essentially a one-time exercise in capturing excess amounts in some of the special funds which can't be replicated next year.
I'm also concerned about just 'abolishing' vacant positions. This kind of decision implies that every position is equally important to the functioning of the state government. That's clearly not the case. It would be good to see some actual analysis that identifies and eliminates lower priority functions and programs and preserves those that are considered more important. I'm hoping I'll see that when the Governor submits his budget proposals for next year.
It's going to be a difficult budget and the legislature is going to have its hands full trying to assess the reductions. Local jurisdictions in Maryland are already facing sharp reductions in their budgets. Given the nature of the Maryland state budget it's almost impossible to craft the required budget reductions without significant reductions in aid to local jurisdictions. Everyone had better be preparing for the pain ahead.
[The painting of A Woman and Two Men is by Jan Vermeer and was done in 1669 or 1670]