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With Revenues Down, Maryland Officials Brace for More Cuts

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By Bobby McMahon
Capital News Service
Thursday, Sept. 17, 2009

ANNAPOLIS - Maryland officials will need to make at least $233 million more in cuts to balance the state's current budget, according to projections released Thursday at a Board of Revenue Estimates meeting.

Eloise Foster, secretary of Budget and Management, said the state would need to make those cuts to break even. The latest budget news comes on top of the $750 million in cuts made since July 1.

"What we're faced with is that we've made a number of deep cuts," Foster told reporters, "and once again we're going to be asked to go back to the drawing board to come up with another budget balancing plan to do that."

To ensure Maryland stays in the black, Foster recommended that the state cut $290 million to $300 million from its budget, figures which are in line with what Gov. Martin O'Malley told reporters Wednesday. In a statement released after the meeting, O'Malley said his administration would act "quickly and responsibly" to address the shortfall.

"This will not be easy, but we will make these decisions mindful always of the impact they will have on our families, our communities and our mission to improve public safety and public education in every region of our state, and to expand, indeed to protect, opportunities for more of our families," O'Malley said in a statement.

Foster said that discussions with O'Malley and other officials about how to address the shortfall "will be finalized in the next several days."

The state will also face an estimated $2 billion revenue shortfall in the next fiscal year, Foster said, which is roughly $500 million more than she had anticipated.

"I was expecting to have a write down," Foster said. "I don't think I expected the write down to be as high as it is."

Asked whether the $2 billion might be too high, Joseph Shapiro, a spokesman for Comptroller Peter Franchot's office, said that the figure was not doctored and is simply a reflection of the economic numbers the state has.

"I think we'll have a more complete picture of [fiscal year 2011] at the December meeting," Shapiro said, "but if you're going on the raw economic data that we have, and simply the numbers, that's what stands right now."

Those cuts are necessary because of the shortfall in revenues announced at the meeting. The board, which offers estimates for how much the state will receive in taxes and other sources of revenue, lowered its projections for the current year from roughly $13 billion to $12.3 billion.

The shortfall can be blamed mostly on the massive drop in income taxes coming from citizens and businesses as a result of lost jobs, declines in wages and other issues related to the economic recession. But the state also reduced its estimated income from tobacco taxes by $18 million, which Board of Revenue Estimates Director David Roose attributes to higher state and federal taxes on cigarettes as well as the long-term trend of people kicking the habit.

"[The $18 million write-down] is not huge, but every little bit in this environment is a problem," Roose said.

During the meeting, state officials and business leaders from across Maryland expressed subdued optimism that the economy would slowly recover next year. But, in a sentiment echoed by many, Martin Neat of First Shore Federal Savings and Loan Association cautioned about the road ahead.

"No one really believes we're out of the woods yet," Neat said.


Copyright 2009 University of Maryland Philip Merrill College of Journalism

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