Next year's budget woes
There’s an increasing amount of chatter in Annapolis about the possibility Congress might put the brakes on an expected $24 billion stimulus extension that Gov. Martin O’Malley and other governors are counting on to balance state budgets.
O’Malley et al do have a back-up: Should the $389 million Maryland expected from the federal help fail to materialize, the state would likely draw down the fund balance and dip again into the once-obscure income tax reserve fund.
“We’d rather not have to do that,” O’Malley said this morning after appearing at a ribbon cutting for a new waterfront Morgan Stanley building in Fells Point. “That is our contingency plan. It is not one that we want to have to resort to.”
The governor borrowed $366 million from the income tax reserve fund to balance this year’s budget and another $350 million for the budget year that starts July 1. A Senate added provision to the budget calls on the state to take an additional $200 million from the fund if the federal help does not arrive. The plan reduces the likelihood that O’Malley will need to go to the Board of Public Works seeking more cuts during an election year.
O’Malley warned that next year’s fiscal picture outlook is still tough. “We’re already putting together a preliminary budget for the next fiscal year. It is challenging.”
The governor mentioned the layoffs. “Your next question is how many would you lay off?” O’Malley said. “We hope not to layoff. We hate furloughs but we hate layoffs worse.”
