February 24, 2010

GOP offers ‘tough medicine’ in budget cuts, layoffs

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By Len Lazarick
Len@MarylandReporter.com

Republican leaders are asking legislative budgeters to swallow “a bitter pill” of 1,500 layoffs and over $800 million in education spending cuts to fix “the long term affliction” of overspending and deficits.

“This is tough medicine,” House Minority Leader Tony O’Donnell told a special hearing of the House and Senate budget committees Tuesday. “We must take the medicine to get rid of the illness long-term.”

Democratic legislators, union representatives and university officials were already choking on the proposals that came from the House GOP caucus and two Republican senators that included laying off about 500 state workers.

The delegates wanted to get rid of another 1,000 people in the state university system, which has seen its employees grow by 2,800 in just three years.

The House GOP proposed $300 million in cuts to public schools, eliminating the $11 million legislative scholarship program, cutting the travel budget in half at the universities ($27 million), abolishing a $20 million Chesapeake Bay fund and stem cell research funds ($12 million), reducing the salaries of all executives who get more than the governor’s $150,000, and eliminating $100 million in highway funds for Baltimore City, which maintains all its own roads.

They even wanted to chop off the three chefs at the governor’s mansion. A symbolic cut, O’Donnell admitted, but “symbolic is important.”

The House leaders also wanted to repeal automatic increases that drive up spending in over half the budget. And they would gradually repeal the penny sales tax hike and corporate tax increase passed in the 2007 special session. Leaders of the 14-member Senate GOP caucus refused to attend the special hearing set up by Democratic leaders, calling it “a political sideshow.”

But Republican Sens. David Brinkley, Frederick County, and E.J. Pipkin, Upper Shore, presented their own plans that they said would turn projected $6 billion deficits over the next four years into modest surpluses.

Brinkley and Pipkin offered similar education cuts, including a roll back in university funding to 2007 levels. But they would also make the counties pay half the cost of teachers’ pensions that the state now totally pays for, saving $450 million in fiscal 2011, and more in later years.

They would also raise employee contributions to the pension system from 5 percent of salary to 7 percent ($87 million) and scale back funding for mass transit in favor of highways.

Current spending “cannot be supported without a major tax increase” next year, said House Minority Whip Chris Shank, Washington County.

“If you don’t want to accept these cuts, tell us what taxes you want to raise,” Pipkin said.

“I totally disagree with that,” said House Speaker Michael Busch, who had pushed for the hearing to see what the Republicans would cut.

“I thought it was healthy to have the hearing we had today,” Busch told reporters afterward. “They came forth with an honest effort.”

But the fact that the House GOP only came up with $829 million in proposed cuts “shows how tough it is to get where they got to.”

Busch said it would be difficult to get even a majority of Republicans to agree to the cuts proposed by the delegates and senators.

The sharing of teacher pension costs with the counties is something long favored by Democratic Senate President Mike Miller, but the House GOP didn’t embrace that solution. Most county governments are opposed as well, Busch said. “They don’t want any part of that,” and Republican lawmakers are “also getting pulled by their local governments.”

While the GOP said a third year of furlough days – essentially pay cuts – would be bad for morale, Busch said state employee unions say they prefer furloughs to layoffs.

Sue Esty, legislative director of AFSCME which represents 30,000 state workers, called the layoffs “significant and painful.”

“They might have a morale issue if they’re furloughed, but they really have an issue if they’ve lost their job,” Esty said.

The cuts in education aid and highway funds “would severely affect the citizens of Baltimore and the Baltimore region,” said Sen. Nathaniel McFadden, a Baltimore City Democrat on the budget committee.

P.J. Hogan, the former vice chair of the budget committee who is now chief lobbyist for the university system, noted that the rise in employees at the university system was tied to higher enrollments and the doubling in research grants in just two years, from $750 million in 2007 to $1.4 billion in 2009. At the same time, state support rose only slightly and made up only a quarter of the university budget.