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Fiscal Challenges Deepen For Maryland Lawmakers

ANNAPOLIS, Md. (AP) -- Maryland's $1.6 billion shortfall for the next fiscal year is presenting as puzzling a challenge as ever for Gov. Martin O'Malley and lawmakers returning for the Maryland General Assembly's 90-day session, following four years of hard choices compounded by the recession.

O'Malley, who will submit his budget proposal to lawmakers later this month, describes it as the most difficult he has ever had to put together, as lawmakers convene Wednesday for the first day of the session.

"It's a Rubik's Cube of really painful choices, and however you twirl and adjust that Rubik's Cube, at the end of the day it's still a cube of very painful choices," said O'Malley, a Democrat.

"This next budget that I submit is going to be balanced entirely with cuts, and that will be the beginning of the conversation that we'll have with the members of the General Assembly."

While the state has contended with bigger shortfalls under O'Malley, who was re-elected in November, the state does not have federal stimulus money this time to help soften the blow. The state also has pushed its debt limit in recent years, significantly cutting into the amount of bonds available for a variety of competing needs for state facilities, health and social services, education and public safety. In recent years, lawmakers have resorted to spending transfers from various state funds to help balance the books, but those options have dwindled.

"We've raided every pot of money," said Delegate Gail Bates, R-Howard. "There's no easy fixes."

It remains unclear how the shortfall will affect jobs in state government. O'Malley struggled to avoid layoffs as much as possible during the recession, and he hopes to avoid another year of furloughs for state employees, but he hasn't ruled them out yet.

Lawmakers also will be grappling with the state's long-running problem of more than $18 billion in unfunded pension liabilities over 25 years. Maryland also has unfunded health care liabilities that are estimated to be about $15 billion. A state commission has proposed that state employees work years longer before becoming eligible for pensions or retiree health care benefits, an idea that was quickly criticized by union leadership.

O'Malley has ruled out passing on pension costs to the state's counties. That's sure to raise debate in the Legislature, where state Senate President Thomas V. Mike Miller, a Democrat, has favored a push to begin making counties take on some of the burden.

O'Malley has so far ruled out initiating tax increases, but some are bound to come before lawmakers.

House Speaker Michael Busch, D-Anne Arundel, said lawmakers are waiting to see what O'Malley's budget proposal will be.

"The governor has said he's not going to initiate a revenue increase," Busch said in an interview Monday. "I mean, I think he's open to it if there's some kind of groundswell from either local governments or legislators who feel that there's programs that are getting cut that they want to continue to fund."

Republicans say they're not convinced new taxes are off the table.

"I think the Legislature will both try to raise taxes and try to push pensions on to the local governments, which is the worst possible thing we can do in this economy," said Delegate Anthony O'Donnell, R-Calvert, the House minority leader.

One tax proposal that has been floated in the past is a dime-a-drink increase in the state's alcohol tax, which would raise an estimated $200 million. Supporters of the idea point out that the tax on beer and wine hasn't been raised since 1972, but opponents say it could hurt business in restaurants and bars.

Some also are talking about the possibility of a gasoline tax increase to help rejuvenate funding for transportation needs. That tax hasn't been raised since 1992.

The state's budget situation promises to rekindle debate on how much state money will go toward cleaning up the Chesapeake Bay.

Last year, when the Chesapeake Bay Trust Fund was due to receive about $42 million, O'Malley budgeted $20 million, which lawmakers kept after debating whether to cut it down to as low as $10 million.

Environmentalists are hoping O'Malley will propose legislation requiring utilities to commit to long-term contracts to buy offshore wind energy. In November, O'Malley appeared with Interior Secretary Ken Salazar at Baltimore's Fort McHenry, where the secretary vowed to spur offshore wind projects in the Atlantic Ocean by expediting permits and identifying promising areas for wind power.

"There's momentum," said Mike Tidwell, executive director of Chesapeake Climate Action Network.

Social issues like same-sex marriage are also expected to come before the General Assembly. Busch said he expected a serious debate on same-sex marriage legislation. Maryland law currently only recognizes marriage between a man and a woman.

Campaign finance reform legislation also is expected to come before lawmakers, following a report issued earlier this month by Attorney General Doug Gansler.

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

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