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Ehrlich withholds maryland funding { June 26 2003 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A33614-2003Jun25.html?nav=hptop_tbhttp://www.washingtonpost.com/wp-dyn/articles/A33614-2003Jun25.html?nav=hptop_tb
Ehrlich Orders Funding Withheld
$650 Million Affects Most Md. Agencies
By Lori Montgomery
Washington Post Staff Writer
Thursday, June 26, 2003; Page A01
Maryland Gov. Robert L. Ehrlich Jr. (R) has ordered the state comptroller to withhold more than $650 million in payments to state agencies beginning July 1, an unexpectedly dramatic reduction in spending that could force almost every agency to lay off workers and slash services by as much as 10 percent.
In a memo delivered yesterday to Comptroller William Donald Schaefer (D), Ehrlich's budget secretary ordered Schaefer to release $9.8 billion of the $10.5 billion appropriated by the General Assembly to fund most functions of state government.
"Due to fiscal uncertainties facing the state," the memo said, the remainder is to be held in reserve until "released by the Secretary."
The action marks the first time a Maryland governor has exercised his authority to cut off the flow of tax dollars to state agencies, according to fiscal authorities. It also may signal that Ehrlich is considering far more severe cuts than he previously indicated.
In the past, Ehrlich said he had asked his Cabinet secretaries to identify as much as $450 million in cuts, or about 7.5 percent of their budgets. Under yesterday's order, public schools will receive every dime of the $3.3 billion budgeted for their operations. But the university system, local governments, the state health department, the prison system and virtually every other agency will be unable to spend as much as 10 percent of their budgeted funds.
Paul E. Schurick, Ehrlich's communications director, called the move "prudent planning," adding that no one "should be alarmed by this."
"These are not reductions in budgets," Schurick said. "This is not a signal that budgets are about to be reduced. Spending will be reduced in the upcoming fiscal year. But there's a lot of uncertainty in the air, and this action is simply prudent planning."
The move surprised and confused Democratic legislative leaders, as well as officials with the University System of Maryland.
In recent days, Ehrlich has said that an improving economy and an unexpected infusion of federal funds might reduce the severity of cuts needed to head off a budget shortfall projected to approach $1 billion for the second year running. This week, the administration told university officials to prepare for reductions of $40 million, rather than cuts of as much as $60 million that Ehrlich had warned of earlier. That notice prompted college officials to recalculate a package of tuition increases that was to be voted on tomorrow by the Board of Regents.
Yesterday's order, however, instructs the comptroller to reduce payments to universities by more than $87 million, a number that university officials had not heard discussed. Schurick declined to explain the discrepancy, saying that he does not expect the university system to be required to "absorb more than $40 million in cuts."
House Speaker Michael E. Busch (D-Anne Arundel) said Ehrlich should explain what's going on. "In my 17 years in the legislature, this is the first time in my knowledge this has ever taken place," Busch said. "Are we laying people off? Are we cutting programs? Is it just being held until a later date?
"If you're a state or university employee, you're sitting here trying to figure out what's going to happen," Busch said.
Under state law, the comptroller regularly distributes tax revenue to state agencies. Normally, those disbursements would add up to the amount budgeted by the General Assembly. But state law allows the governor to control spending before the start of the fiscal year, July 1, by ordering the comptroller to hold some funds in reserve.
To make those reductions permanent, Ehrlich must seek the approval of Schaefer and state Treasurer Nancy Kopp (D), who sit with him on the state's Board of Public Works. Schurick said the board could be asked to approve the first reductions as early as July 16.
Schaefer and Kopp have expressed strong disapproval of Ehrlich's plan to cut state services across the board. Schaefer has said he will reject further cuts to higher education or service cuts "that will hurt people," particularly the elderly and the poor.
The memo delivered to Schaefer yesterday indicates that few would be spared under Ehrlich's budget-cutting plans.
Among the agencies scheduled to receive all their state funds: the Maryland Stadium Authority, state schools for the deaf and the blind and the offices of some top bureaucrats, including the administrative offices of State Police Superintendent Edward T. Norris.
Staff writer Amy Argetsinger contributed to this report.
© 2003 The Washington Post Company
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