Maryland lawmakers face daunting challenge of whittling $2 billion deficit in election year

New Md. legislative session, new budget deficit

ANNAPOLIS, Md. — Once again, Maryland lawmakers find themselves with a daunting $2 billion deficit this legislative session, and the balancing act will be even more unpalatable in an election year.

Vexing budget problems again will play a prominent role in the 90-day session that opens Wednesday. With every seat in the Legislature up for re-election in November, tax increases have been ruled out by the Maryland General Assembly’s presiding officers.

“There are going to be a lot of challenges out there this year,” House Speaker Michael Busch said. “I don’t see any revenue increases on the horizon. I don’t think that anybody believes that that’s going to be the way to get us out of this process.”

That means Gov. Martin O’Malley, who also is up re-election, and lawmakers will have to go through another round of spending reductions at the worst possible time for public officials who approved big tax hikes and budget cuts in recent years.

O’Malley and leading lawmakers say they plan to again largely spare K-12 education from big budget hits. They also want to avoid cuts to higher education and community colleges. That leaves only a portion of the $13 billion operating budget on the table for cuts, including health care and money for roads — both targets of big hits in previous budget-cutting.

O’Malley has been focusing on job creation and helping small businesses as keys to his legislative agenda; he’s advocating a $3,000 tax credit to businesses that hire someone who is unemployed.

The governor, a Democrat, also wants to renew the state’s heritage tax credit for three more years to help boost construction jobs. The program provides income tax credits on costs for rehabilitating a certified heritage structure.

“Everything we do right now needs to be looked at through the lens of what can we do to preserve jobs, to save jobs, to create jobs,” O’Malley said.

Republicans, meanwhile, contend O’Malley and Democratic lawmakers have made Maryland hostile to business.

They are jeering at the governor’s job growth proposals after O’Malley spearheaded $1.4 billion in tax increases in 2007 — among them increases to the sales tax, corporate income tax, personal income tax, the vehicle titling tax and a surcharge on millionaires.

“To have someone now saying: ‘My whole issue is jobs, jobs, jobs,’ I’m sorry. I’m sorry. You’re a little late to that party,” said Senate Minority Leader Allan Kittleman.

Tension between Democrats, who have big majorities in both legislative chambers, and Republicans already are evident.

Kittleman, the lone Republican on a conference panel of local officials Friday, said Democratic leaders have failed to include any Republicans in serious budget discussions. He also said while there won’t be taxes in an election year, he warned that 2011 could be very different.

“They don’t include any Republicans in the fiscal leadership meetings,” Kittleman said. “Not one. Not one. Why not? If you can defend what you’re doing, you should be able to allow the other side in to work with you.”

Busch, who was on the panel, has regularly criticized Republicans for wanting steeper budget cuts — but never offering much detail, and he repeated that Republicans will have the opportunity to make deep cuts.

“If you want be in the game, and you want to play, and you want to be included, put out those specific cuts,” Busch said, his voice rising.

O’Malley and some legislators hope more help will come from Washington. Last year’s federal stimulus package helped the state avoid 700 layoffs initially put into last year’s budget.

“There’s some feeling, or some hope, that we will be getting some additional money, some stimulus money,” said Sen. Ulysses Currie, chairman of the Senate Budget and Taxation Committee.

Joseph Bryce, O’Malley’s chief legislative officer, said officials still need to talk with union representatives about any furloughs or layoffs in the fiscal 2011 budget, which O’Malley will release Jan. 20.

A perennial debate over whether to shift some teacher pension costs to the county likely won’t gain traction this year either. Busch said he believes it’s off the table, because stimulus money was used to fund pensions last year and this coming fiscal year.

Bryce said O’Malley will have a new initiative to promote renewable energy such as wind and solar power.

Bryce also said the administration will try again with legislation to create civil penalties for making a false health claim, a measure that failed the Senate by one vote last year.

The administration and lawmakers also are looking into strengthening laws to prevent child sexual abuse, after the death of an 11-year-old Salisbury girl last month who authorities say was abducted by a registered sex offender.