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Md. spending board approves $413M in cuts, defers other reductions

Maryland Board of Public Works, shown in a March 2020 photo, is scheduled to consider state budget cuts Wednesday, July 1, 2020 in response to the impact of COVID-19 on the economy. (AP Photo/Brian Witte, File)

Maryland Board of Public Works, shown in a March 2020 photo From left are Treasurer Nancy Kopp, Gov. Larry Hogan and Comptroller Peter Franchot. (AP Photo/Brian Witte, File)

Maryland’s spending board Wednesday approved roughly $413 million in budget cuts, but postponed acting on a contentious proposal to reduce state employee compensation for at least two weeks.

Gov. Larry Hogan warned delaying cuts too long will result in more painful cutbacks later. One way or another, he said, Maryland must cut an additional $205 million from its budget.

“We have to find alternatives to that $205 million … not cutting is not an option,” Hogan said.

Initially the Board of Public Works was set to consider items including a permanent 5% cut to employee pay, eliminating cost of living increases, and reductions in state contributions to employee retirement.

Additionally cuts to state education, including $12.4 million in disparity grants and roughly $25 million in cuts including funds for the Healthy School Facilities Fund, originally included on the board’s agenda were pulled from the docket ahead of the meeting.

Decisions on those items were put off after Comptroller Peter Franchot and Treasurer Nancy Kopp, the other members of Maryland’s Board of Public Works, objected.

Franchot, however, joined Hogan voting in favor of the other cuts, which he called painful but necessary. Those cuts impact a broad swath of government agencies with some of the largest reductions coming from the Office of the Public Defender, Department of Public Safety and Correctional Services, and from state support for institutions of higher education.

Also included in the cuts was a $1.6 million appropriation to the Baltimore Symphony Orchestra, which comes less than a year after a strike and concerns about the organization’s long-term financial health raised the specter of the 103-year-old institution closing.

“I agree with you (governor) that we need big cuts, and big cuts are coming … I just hate to see us prematurely taking balancing measures on the backs of teachers, and state employees, (or) on vulnerable Marylanders,” Franchot said.

Treasurer Nancy Kopp delivered the lone vote against the $413 million in cuts. It’s not that the cuts are unwarranted, she said, she simply wants to wait two weeks to review the latest state revenue report, and give the federal government time to approve additional funds to bolster state finances.

“I think this is a great beginning to a conversation that will educate not only our state workers, but the public as well,” Kopp said.

Unions representing state workers said they intended to protest slashing employee compensation. After the decision was pushed back, however, union representatives said they hope to work with the Hogan administration to find cost saving measures acceptable to their members.

“We’d like to mitigate as much of the damage to our members as possible while still allowing for budget reductions to take place,” Rosemary Wertz, of AFT Healthcare-Maryland, said.

David Brinkley, secretary of the Department of Budget and Management, said the budget cuts are needed to help the state respond to an economic challenge unlike any other Maryland ever has faced. If the federal government provides more funds, he said, state officials are prepared to restore some of the funding that would be cut.

But the state met with bond rating agencies on Tuesday, he said, and they’ve made it clear that states like Maryland, which want to maintain top credit ratings, must act quickly to secure their financial health. Ensuring Maryland meets its obligations is more pressing, given the fact it faces a $4.6 billion budget gap in fiscal year 2022.

“We will get across the finish line. But the challenge is to mitigate the pain sooner than later,” Brinkley said.

After the board’s actions, Senate President Bill Ferguson said in a statement more cuts are likely necessary if the federal government does not approve more funds to mitigate the financial hardships caused by the COVID-19 pandemic.

“Unless the federal government takes action, what we saw today is a forecast of things to come. The COVID-19 crisis has wreaked havoc on state budgets throughout the country, and we will face more cuts without help,” Ferguson said.

While the federal government has approved funds to help local governments handle the cost of emergency measures related to COVID-19, it has not approved funds to help states absorb revenue losses or reimburse expenditures from rainy day funds.

While leaders in the Democratic-controlled House of Representatives support the idea, Senate Majority Leader Mitch McConnell, a Republican, has labeled the proposal a “blue state bailout.”

Hogan, who has advocated fiscal restraint since taking office, said  the reductions he voted for would have been unimaginable  previously. It’s the only way, he said, to save the jobs of thousands of state employees at a time when other governors have laid off 1.6 million workers.

“I don’t like a single one of (the cuts)… As painful as these cuts are the alternative of failing to take action are much more painful,” he said.

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