Annapolis, MD (July 10, 2007) – Governor Martin O’Malley today announced over $280 million in Fiscal Year 2008 budget reductions and cost containment measures, including the elimination of some state workforce positions, as an initial step in closing the $1.4 billion deficit that the state faces next year.
In May, O’Malley directed his Cabinet Secretaries to reduce state spending by $200 million and today Governor O’Malley made those recommended cuts public. The budget reductions will go before the Board of Public Works tomorrow.
“This first round of cuts was not easy, but as we work to close a $1.4 billion structural deficit, our state agencies have to become more efficient, work smarter and focus on their core mission,” said Governor Martin O’Malley. “In the coming months, we face more difficult choices as we work with the General Assembly to balance the budget and continue to make critical investments in our State’s future.”
During today’s press conference, O’Malley announced $213 million in General Fund reductions in more than 40 state agencies and government offices, including:
As a result of these budget reductions, 147 state government positions will be eliminated, 17 of which are currently filled. In addition, 35 contractual positions will be eliminated.
O’Malley also announced only minimal cuts to the Maryland State Police ($1.5M) and the Department of Juvenile Services ($1.2M) to reduce contractual employees and vehicle expenses.
In addition to the $213 million in General Fund reductions, O’Malley announced $14 million in special fund reductions and $53 million in federal matching fund reductions. The reduction in special funds is due to an anticipated shortfall in Cigarette Restitution Funds resulting from ongoing litigation with the tobacco manufacturers.
Maryland’s structural deficit developed as growth in ongoing state spending increasingly outpaced revenues. Annual government spending commitments grew by $2 billion with the Bridge to Excellence school funding reforms – commonly know as the Thornton law – enacted in 2002. An income tax cut fully phased in that same year reduced state revenues by nearly $1 billion annually, leading to a significant budget gap.
Either the tax cut or the increased education funding likely would have been affordable by itself. Together they created a structural budget deficit that reaches more than $1 billion annually. This structural problem has gone unaddressed in the years since 2002, with record spending increases prior to this year, including a 12% hike in FY 2007.
[ Reductions at a glance - Reductions in detail ]