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House begins work on O’Malley’s $34.2B 2012 budget proposal

ANNAPOLIS — Business regulation and economic development funding escaped largely unscathed as the House of Delegates made preliminary changes to Gov. Martin O’Malley’s $34.2 billion budget proposal on Wednesday.

“We’re in an economy where job creation and economic development are a focus for us,” said Del. Heather R. Mizeur, vice chairwoman of the House Education and Economic Development Subcommittee.

That panel and others voted on recommendations that will be taken up by the full Appropriations Committee on Friday. The House of Delegates will likely debate the budget beginning in the middle of next week and take a final vote on Friday, sending the bill to the Senate.

The largest change the House made public Wednesday was a plan to restore $58.1 million in public education funding. O’Malley proposed a cut of $93.7 million in planned aid for public school systems, and the House plan would maintain the same per-pupil spending as fiscal 2011 while taking into account increased enrollment.

Del. John L. Bohanan Jr., the education and economic development subcommittee chairman, said the “full package,” including some fee increases, will come together Friday.

“A lot of other actions are being taken that will add up to a balanced budget,” said Bohanan, D-St. Mary’s.

Delegates left some of the biggest ticket items until then, including a potential mandate to county governments to pick up part of the tab for teacher pensions and a $100 million budget-balancing raid of transportation funding. A transportation subcommittee, however, agreed to most of the governor’s transportation budget and rejected two proposals from staffers to eliminate the commissions that oversee the Maryland Port Administration and the Maryland Aviation Administration.

Bohanan’s subcommittee recommended leaving the Department of Labor, Licensing and Regulation’s proposed budget of $315.2 million intact, save for a $1.2 million grant program for areas affected by horse racing that was axed in hopes of using the money to pay for agricultural fairs.

Legislative analysts had recommended cutting $7.4 million from the Department of Business and Economic Development’s incentive programs. The subcommittee rejected proposed reductions of $2.5 million each from the Maryland Small Business Development Financing Authority, which offers loans and loan guaranties to help small businesses expand, and the Maryland Economic Development Assistance Authority and Fund, which provides below-market rate loans.

Both programs have shrunk in recent years, with MSBDFA offering $8.8 million in incentives in fiscal 2010, compared to $15.5 million in 2007. The MEDAAF outlay shrank to $14 million from $21 million.

Prompted by Mizeur, however, the subcommittee voted to redirect $2.4 million that had been slated for the Maryland Industrial Development Financing Authority to fund nanobiotechnology research.

“There’s a whole range of potentially life-saving technologies here,” said Mizeur, adding that scientists in the field are using nanotechnology to study ways to combat diseases.

The $2.4 million would be sent to the Coordinating Emerging Nanobiotechnology Research in Maryland Program, which was created in 2008. Mizeur said 104 applicants sought a piece of the $3 million allocated in 2009 — 12 were eventually awarded $250,000 apiece — but the program has withered for lack of funding since then.

The subcommittee voted to keep the $1.2 million state contribution to the Maryland State Arts Council and recommended the General Assembly require management of The Hippodrome Performing Arts Center in Baltimore to come up with a long-term plan to cover its funding shortfall.

Maryland took control of the historic theater in 1998 and reopened it in 2004 after $65 million in renovations. Ticket sales — which carry a $2 surcharge to help cover the theater’s debt service — have lagged state expectations, forcing the state to pick up more of the tab since 2007.