State agencies have been asked to reduce spending as legislators and a new governor face the challenge of dealing with a projected budget shortfall of nearly $300 million.
Nina Smith, a spokeswoman for Gov. Martin J. O’Malley, said the “Department of Budget and Management has advised agencies to slow spending in order to help resolve the anticipated shortfall in the current fiscal year.”
Legislators were told last month that the state faces a shortfall of nearly $300 million in the current budget year and a projected shortfall of $600 million.
Long-term, the state faces growing structural deficits that are currently projected to approach $1 billion in fiscal 2019 and exceed that amount in fiscal 2020.
On Thursday, officials at state universities around Maryland said they instituted hiring and spending freezes after being asked to do so by the University System of Maryland.
The university system is preparing for a potential budget reduction of $40 million to $80 million, according to Frostburg State University President Jonathan Gibralter, who sent a memo to the campus community on Nov. 19 explaining the situation.
Gibralter wrote that State Department of Budget and Management Secretary T. Eloise Foster “asked that all state entities reduce their rate of expenditures and prepare for a mid-year budget cut.”
Some universities told employees to expect the reductions to be permanent.
“The Department of Budget and Management instructed the USM to slow down spending and, consequently, the chancellor asked the USM institutions to do so,” Betty Crockett, Salisbury University’s vice president of administration and finance, wrote in an email.
“SU is participating as requested by the Chancellor. Institutions have flexibility, but they must anticipate any upcoming cuts to be base budget cuts. Among the options institutions may choose are freezing positions and/or reducing operating expenses. SU has frozen positions and is also reducing operating costs.”
Smith, the spokeswoman for O’Malley, said no specific reduction targets were set for the state universities and that the governor “did not ask the university to impose a hiring or spending freeze.”
It is not clear if state agencies were asked for similar spending and hiring freezes.
“No specific instructions were provided,” Smith said.