Another round of budget trims is mostly one-time transfers and revenues

By Andy Rosen
Andy@MarylandReporter.com

The state is $362 million closer to balancing its General Fund budget this year, as the Board of Public Works acted Wednesday to trim the state’s spending for the third time since July.

But only about a quarter of those savings will carry forward into future years, budget officials said.

Nearly $259 million that Gov. Martin O'Malley used to generate the savings comes from tapping pots of money outside the General Fund or from revenue not anticipated when the General Assembly passed the budget in the spring. This includes new tax revenue from Constellation Energy Group, money diverted from traffic tickets, and transfers from the University System.

The cuts did include $105 million in General Fund spending -- layoffs of nearly 70 state workers among them -- and total funding reductions of $203 million, including federal money. The General Fund has been cut to $13.1 billion for the year, $1.4 billion below last year’s budget. Much of that money has been replaced with federal stimulus money.

Budget Secretary Eloise Foster said $93 million from Wednesday's changes were likely to carry over into future years. She told the BPW that a total of $327 million will carry forward from the three rounds of mid-year budget reductions, which amount to $1.1 billion.

For example, the BPW approved a $25 million transfer from the University System of Maryland’s fund balance, reserves USM puts aside in part to assure bond raters of the system’s financial stability. The transfer is similar to other reductions in university funding this year, totaling $65 million.

University system officials said they do not expect the changes this year to threaten the organization's financial position.

“We are very careful in any discussion we have with the state,” said Joe Vivona, USM vice chancellor of administration and finance. “We would not get close to jeopardizing our credit rating.”

Another major chunk of the budget shifts Wednesday came in the form of an expected $129 million corporate income tax windfall from the closure of the deal between Baltimore-based Constellation Energy Group Inc. and the French utility Electricite de France. The budget changes leave the state in line to end the year with a $123 million surplus.

The three-member state spending panel, which comprises the governor, the comptroller and the treasurer, is allowed to cut as much as a quarter of the state budget when the legislature is not in session. The BPW also recognized $12 million from a tax amnesty program that ran this fall.

Wednesday, it approved moving the proceeds from moving violations such as speeding tickets to the state’s General Fund. The $2 million that the state expects to bring in would have been split between the state’s Helicopter Bond Fund and assistance to volunteer fire departments.

The state now plans to buy helicopters next year with mostly borrowed money, as MarylandReporter.com reported last week. LINK

In addition, the BPW also approved a $6 million transfer from the Injured Workers’ Insurance Fund, the state-run worker’s compensation insurance program, and leaves more than $3 million in the fund.