Rev­enue short­fall se­ri­ous; Med­i­caid, uni­ver­si­ties will bear most of the bur­den

Baltimore Sun - - FRONT PAGE - By Michael Dresser mdresser@balt­ twit­­dresser

The Ho­gan ad­min­is­tra­tion will ask the Board of Pub­lic Works to ap­prove $82 mil­lion in spend­ing cuts from the cur­rent state bud­get to meet a rev­enue short­fall.

The Ho­gan ad­min­is­tra­tion will ask the Board of Pub­lic Works to ap­prove $82 mil­lion in spend­ing cuts from the cur­rent state bud­get, in­clud­ing cuts to col­leges and uni­ver­si­ties, lo­cal gov­ern­ments and Med­i­caid.

The pro­posal, which will go to the board next week, re­flects an ex­pected rev­enue short­fall. The board is made up of Repub­li­can Gov. Larry Ho­gan and two Democrats, Comptroller Peter Fran­chot and Trea­surer Nancy K. Kopp.

Bud­get Sec­re­tary David R. Brink­ley out­lined the pro­posed re­duc­tions to the state’s $43 bil­lion bud­get in a con­fer­ence call Fri­day. He pre­sented the ac­tion as part of Ho­gan’s strat­egy to ad­dress an ex­pected bud­get gap of $175 mil­lion to $225 mil­lion.

Brink­ley echoed points raised by the Gen­eral Assem­bly’s chief bud­get an­a­lyst, War­ren Deschenaux, at a brief­ing this week. Deschenaux, who has been a tar­get of Ho­gan ad­min­is­tra­tion crit­i­cism, warned law­mak­ers that the state can’t con­tinue to spend more than it is bring­ing in. “He’s ab­so­lutely right,” Brink­ley said. Deschenaux said the move was “not un­ex­pected.”

“The mag­ni­tude of the ac­tion nowhere near ad­dresses the full di­men­sion of the prob­lems, but it’s a start,” he said. “We can ex­pect to see fur­ther re­trench­ments as we move through the bud­get.”

Brink­ley pre­sented the pro­posed cuts as Ho­gan’s sec­ond step to ad­dress a rev­enue short­fall. The sec­re­tary said the first was Ho­gan’s de­ci­sion this year to with­hold $80 mil­lion the leg­is­la­ture had ear­marked for lo­cal school sys­tems and im­proved com­pen­sa­tion for physi­cians who care for Med­i­caid pa­tients, among other spend­ing.

“We’d been in an $80 mil­lion deeper hole had he not done so,” Brink­ley said.

Some of the cuts re­flect de­clin­ing needs for ser­vices or are mit­i­gated by shift­ing funds from other sources, Brink­ley said.

The largest sin­gle cut, $20 mil­lion for Med­i­caid, would be cush­ioned by shift­ing funds from the state’s Cig­a­rette Resti­tu­tion Fund, cre­ated by a le­gal set­tle­ment with to­bacco com­pa­nies.

The Univer­sity Sys­tem of Mary­land would ab­sorb $18.3 mil­lion in cuts. That would re­quire the abo­li­tion of 60 va­cant po­si­tions and 41 that are cur­rently filled, of­fi­cials said.

Joe Vivona, the sys­tem’s vice chan­cel­lor for ad­min­is­tra­tion and fi­nance, said cut­ting the 41 filled po­si­tions doesn’t nec­es­sar­ily mean lay­offs. He said the sys­tem has enough turnover that it prob­a­bly can use new va­can­cies to avoid lay­offs.

Vivona added that $4 mil­lion of the re­duc­tion will be off­set by trans­fer­ring money from the Higher Ed­u­ca­tion In­vest­ment Fund, leav­ing a net $14 mil­lion re­duc­tion. “This I think we can han­dle,” he said. “It’s when you have re­peated cuts you see a dan­ger to aca­demic qual­ity and en­roll­ment lev­els.”

Mean­while, Brink­ley said, a $9 mil­lion cut to the De­part­ment of Ju­ve­nile Ser­vices re­flects a lighter caseload than ex­pected.

Brink­ley said the only cut to lo­cal gov­ern­ments would be a $4 mil­lion re­duc­tion in cer­tain grants. Bal­ti­more and Bal­ti­more County would not be af­fected. Prince Ge­orge’s County would take the largest cut, about $3.5 mil­lion.

The ad­min­is­tra­tion is also propos­ing to re­duce the bud­get for Tem­po­rary Cash As­sis­tance pay­ments to the poor. Ac­cord­ing to the bud­get de­part­ment, the need for such money has steadily de­clined in re­cent years.

Among those feel­ing the im­pact would be Mary­land’s pri­vate col­leges and uni­ver­si­ties. The ad­min­is­tra­tion is propos­ing to trim $4 mil­lion in state aid to those in­sti­tu­tions. The so-called Sellinger pro­gram had re­ceived a 19 per­cent boost in this year’s bud­get. The board is be­ing asked to cut the in­crease in half.

Over­all, the cuts amount to a roughly 1 per­cent re­duc­tion in ap­pro­pri­a­tions for the tar­geted pro­grams. Brink­ley said the rev­enue gap will be closed fur­ther with $12 mil­lion re­ceived as Mary­land’s share of the $15 bil­lion set­tle­ment with Volk­swa­gen over its false claims about the en­vi­ron­men­tal ben­e­fits of its diesel ve­hi­cles.

The pub­lic works board is em­pow­ered by law to make midyear bud­get re­duc­tions to re­flect lag­ging rev­enues.

Fran­chot, a fre­quent ally of the gover­nor, sig­naled ap­proval of the ad­min­is­tra­tion’s plan.

“The comptroller ap­pre­ci­ates Gover­nor Ho­gan’s proac­tive at­ten­tion to the fis­cal chal­lenges fac­ing our state, and he’ll be re­view­ing the specifics in the pack­age sub­mit­ted by Sec­re­tary Brink­ley as soon as pos­si­ble,” said Peter Hamm, a Fran­chot spokesman.

A spokes­woman for Kopp said she would re­view the pro­posed cuts and be pre­pared to vote Wed­nes­day.

The re­quest to the board for bud­get cuts is the first by the Ho­gan ad­min­is­tra­tion. The board in Jan­uary 2015 ap­proved $205 mil­lion in cuts pro­posed by out­go­ing Gov. Martin O’Mal­ley.

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