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O'Malley Budget Proposal Will Make Widespread Cuts

ANNAPOLIS, Md. (AP) -- The pain of a $1.6 billion budget shortfall will be felt throughout Maryland state government, as some state facilities will be closed, certain state functions will be eliminated and state agencies will feel the squeeze of consolidation, Gov. Martin O'Malley's chief of staff said Thursday.

Matthew Gallagher declined to give details about specific budget cuts, pending the official release of the governor's budget on Friday, but he gave a general overview during an interview a day before the proposal was to be made public.

"The state has not been in a position this year to really keep anything off of the table," Gallagher said, describing it as the toughest budget year yet for O'Malley, who just entered his second term.

The governor has said he will not propose tax increases to help bridge the shortfall, relying mostly on cuts. That has raised concerns about how steep the spending reductions will be.

Health care providers have been worried, because health care costs make up a substantial portion of the state budget, and Maryland's long-term Medicaid budget already has been cut over the past three years.

"Long-term care providers are extremely concerned because of the $180 million in cuts already," said Susan M. O'Brien, a spokeswoman for the Health Facilities Association of Maryland.

There will be layoffs associated with closings and consolidations at state facilities and agencies. However, Gallagher said voluntary buyouts will make up the lion's share of job reductions in O'Malley's budget. There have been about 1,500 applications for buyouts, and the state is reviewing the applications to determine which ones to accept.

"It's going to be a significant number of those that will be accepted," Gallagher said. "The budget that will be proposed tomorrow will reflect kind of our best estimate of how many of those that we expect to accept, but the precise number won't be probably known for a couple of more weeks."

Last year, lawmakers required the administration to eliminate 500 positions in budget legislation. Gallagher said he expected the governor's proposal to far exceed that.

Gallagher declined to discuss any potential cuts in education until Friday.

In a bright spot for state employees, O'Malley is steering away from a fourth year of furloughs. Last year, the governor included 10 furlough days for about 67,000 of the state's 80,000 employees.

The state has entered into a tentative agreement with the state's work force for fiscal years 2013 and 2014 that doesn't include a furlough program.

O'Malley, a Democrat, also will propose reforms to put the state's pension system on a path of sustainability.

Maryland has a long-standing problem of more than $18 billion in unfunded pension liabilities over 25 years. The state also has unfunded health care liabilities estimated at about $15 billion.

The governor has said he wants to protect the public pension option and not move toward 401K plans, as some lawmakers have recommended.

"They are not issues that can be cured over one year," Gallagher said. "It's going to take time for the funding level of the system to revamp."

Legislative leaders have said O'Malley has been keeping his budget proposals close to the vest. House Speaker Michael Busch and Senate President Thomas V. Mike Miller are scheduled to meet with O'Malley along with lawmakers on fiscal committees early Friday afternoon to talk about the budget, just before O'Malley has scheduled a news conference to talk about it.

O'Malley has been attempting to brace the public for weeks that this will be an unusually tough budget, as the state's fiscal difficulties are aggravated by the absence of federal stimulus money that propped up the state's budget during the last two years.

"It's going to be a balanced budget and nobody's going to be happy," Gallagher said.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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