Bedeviled by a $1.9 billion budget deficit, the Maryland General Assembly's upcoming session inevitably will be dominated by hard decisions needed to balance the state's books.
While the state budget always is a key focus of the General Assembly's 90-day session, Maryland's battered finances this year have elevated its importance at a time when serious cuts are bound to have a major impact on the state's residents.
"Budget, budget, more budget," is how Sen. Thomas "Mac" Middleton, chairman of the Senate Finance Committee, views the session, which begins Wednesday.
Veteran lawmakers are saying the current budget crisis is at
least as bad as the recession Maryland weathered in the early 1990s, when lawmakers were able to raise revenues to address the problem. This time, though, there's no stomach for tax increases, after a $1.4 billion tax hike just a little more than a year ago.
"It'll be a combination of, hopefully, some reimbursement from the federal government, cuts in state government, a different revenue sharing with the counties and possible use of the rainy day funds," said House Speaker Michael Busch, a Democrat.
In a rare move, lawmakers are even talking about using a little-known reserve account containing $366 million in the comptroller's office. The Local Income Tax Reserve Account was created decades ago to ensure money would be available for tax refunds, but it hasn't been needed. About $80 million was taken out of the account in 1991, during another budget crisis.
Democratic Gov. Martin O'Malley already has put everyone on notice that no one will be spared from cuts, and proposals costing much money will be shelved. It's going to be tough enough just to pay for important priority items in health, education and public safety.
"The best that we'll be able to do is level fund them, but there are going to be lots of cuts all around, and I ask for your continued cooperation and partnership," O'Malley told the Maryland Association of Counties on Thursday night.
Worsening matters, the state needs to find an additional $415 million to make up for declines in revenue in the fiscal year that began July 1. A furlough plan for state employees is already in effect to save an estimated $34 million, and O'Malley and the state Board of Public Works will make more cuts later this month.
The nearly $2 billion deficit will have to be addressed in the fiscal year 2010 budget, which is the one O'Malley will submit later this month for the legislature's review. The General Assembly is required by law to approve a balanced budget every year.
Delegate Norman Conway, who chairs the House Appropriations Committee, said lawmakers need to explore ways to reduce the amount of mandated spending.
"I think you're going to look at everything," said Conway, D-Wicomico. "We have 67 percent of our budget that's mandated. I think we've got to bring that percentage down so that the governor and the legislature can have some flexibility to work within the budget."
Republicans, meanwhile, are criticizing past spending as part of the problem.
Delegate Anthony O'Donnell, R-Calvert, said the state should give up on costly items such as a fund to clean up the Chesapeake Bay and an expansion of health care coverage to the uninsured -- -- plans approved in the 2007 special session along with tax increases aimed at reducing a structural deficit. O'Donnell also said he didn't believe the state should shift problems to local governments.
"I think it will force local governments to raise taxes at a time when the citizens can't afford it," O'Donnell said.
Lawmakers have long bemoaned the state's 100 percent responsibility for teachers' pensions, which cost the state about $700 million a year, and the topic is sure to come up again.
Michael Sanderson, executive director of the Maryland Association of Counties, said he hoped any shifts in expenses would not be made permanent.
"We don't think that's a responsible way to resolve the state's imbalance and, candidly, we're all facing the same economy," Sanderson said.
Delegate Murray Levy, D-Charles, a member of the Appropriations Committee, said the state's current budget woes are already as bad as the last recession and likely to get worse, when the state receives updated revenue numbers in March.
"It's going to be deeper, and I think it's going to be longer, wider," Levy said. "In other words, I don't think there's going to be an instant snap back in the revenues."
Tapping the state's $700 million Rainy Day Fund, and spreading it out over two years, should be part of the strategy to battling the deficit, Levy said.
"It's raining," Levy said. "I don't think we'll get a more difficult time in our lifetime."
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
