Maryland board approves plan to tackle $410M budget shortfall in current fiscal year

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ANNAPOLIS, Maryland — Maryland state agencies will take a 2 percent across-the-board budget cut, and higher education will absorb an added $18 million cut as part of plan to fill a $410 million shortfall for the current fiscal year, according to a plan approved by a state board Wednesday.

Also, people who work with the developmentally disabled in communities won't get as much of a raise as they thought they would. A 4 percent pay hike will be shaved to a 2 percent increase.

The Board of Public Works voted 3-0 to approve cuts and fund transfers needed to make up for underperforming state revenues. It was the ninth time Gov. Martin O'Malley brought cuts to the board during his eight-year tenure to deal with budget problems since the recession.

The term-limited Democratic governor, who leaves office Jan. 21, blamed federal cuts that have hurt large numbers of federal employees in Maryland as a main cause of lowering revenue projections. He also said cutbacks in Washington have hurt small businesses that act as contractors and subcontractors on work needed by the federal government.

"And so government shutdowns, continued threatened government shutdowns, congressional misbehavior that results in sequester cuts that continue on and on and on, have a disproportionate impact on our economy — compared to say the economy of southern California, the northwest or even New England," O'Malley said.

Laura Howell, executive director of the Maryland Association of Community Services, said the cut in pay for people who work with the developmentally disabled is a devastating blow. The increase was part of an agreement in last year's decision to raise the state's minimum wage. It was aimed at keeping wages for providers that help the developmentally disabled live and work in communities above minimum wage.

"Our providers will absolutely struggle to hire highly skilled workers who are needed to help people with disabilities live and work," she said.

The cuts include voluntary early retirement and the elimination of up to 1,000 vacant positions, which together are expected to save about $37.5 million. When the state last offered early retirement to save money in 2010, more than 600 people accepted it.

No layoffs are part of the plan. The 2 percent reduction across state agencies adds up to about $113 million of the savings. The board also will rely on about $108 million in spending transfers from other state funds to help fill the hole.

While the board has the unique power of making budget cuts when the Legislature is not in session, some of the provisions in the plan will need to be approved by the General Assembly, which convenes next week.

Maryland faces a shortfall of about $1.2 billion this fiscal year and the next, which begins July 1. The adjustments are aimed at putting the state on better financial footing to tackle the remaining shortfall of roughly $750 million in the next fiscal year. Gov.-elect Larry Hogan, a Republican, will submit a budget two days after he takes office on Jan. 21.

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