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Divided ‘Works’ Panel Approves Big Budget Cut; Hogan Warns of Layoffs

Maryland Board of Public Works members Gov. Lawrence J. Hogan Jr. (top left), Comptroller Peter V.R. Franchot (top right) and Treasurer Nancy Kopp (bottom left) at their virtual meeting on July 1. Screen shot

Maryland’s Board of Public Works approved a scaled-back plan to reduce state spending on Wednesday, voting 2-1 to chop $413 million from the budget, to offset a steep reduction in revenues.

But Gov. Lawrence J. Hogan Jr. (R), who altered his original proposal under pressure from the panel’s two Democrats, warned that the failure to cut more deeply increased the likelihood that thousands of state employees will lose their jobs in the coming months.

The reductions, coming on the first day of Fiscal Year 2021, will save $395 million in general fund revenue from the state’s nearly $44 billion budget.

Hogan was supported by Comptroller Peter V.R. Franchot (D). Treasurer Nancy K. Kopp (D) voted against the cuts. She said the state should not reduce expenditures until the fiscal picture is clearer and other options have been explored.

After the administration’s initial plan, to cut spending by $672 million, was released on Friday, Franchot served notice that he planned to vote against much of it — $205 million in cuts to education, employee pay and benefits, and aid to local governments. The 20 line-items he objected to were pulled from the Department of Budget and Management’s proposal in the hours leading up to the vote.

Franchot said the cuts approved by the board, even though not what Hogan wanted, nonetheless represented the second largest reduction in spending ever.

“I just hate to see us prematurely taking balancing measures on teachers and state employees and vulnerable Marylanders,” said Franchot, an announced candidate for governor in 2022. “There are going to be many more cuts because of the fact that the White House has dropped the ball,” a reference to the feds’ widely-criticized COVID-19 response.

Kopp noted that she and Franchot — former legislators and long-serving members of the board — have approved billions of dollars in reductions over the course of their tenure. “It isn’t that we can’t make tough decisions.”

But with employers set to file income tax withholding revenue on July 15 and uncertainty as to whether the federal government will approve more aid to states and localities, she pushed to delay any cuts for at least two weeks.

After that state leaders can “start doing the cuts in an incremental, serious way, as we begin to understand what our state fiscal posture is, what the federal government [response] is, where the other reserve funds are that could be used, and a range of options,” Kopp said.

“And I will be with you arm-in-arm in attacking this problem,” she assured Hogan.

Senate President Bill Ferguson (D-Baltimore City) praised Franchot and Kopp for pushing back against the governor, and he urged the board to “carefully evaluate potential cuts and their effects on Marylanders as they move forward”.

“Unless the Federal government takes action, what we saw today is a forecast of things to come,” Ferguson said. “The COVID-19 crisis has wreaked havoc on state budgets throughout the country, and we will face more cuts without help.”

Before the vote, labor leaders told the board that the original proposal would have cut worker pay, rescinded agreed-upon salary and cost-of-living raises, and boosted employee benefits costs.

“We are among those at the front line of this fight against COVID-19,” said Jerry Smith, head of the Maryland Professional Employees Council, which represents a wide range of state workers.

“For 20 years we have utilized collective bargaining as a way to ensure the voices of those doing the work in this state are heard,” he added. “We did not truly engage in an exchange of well-thought-out proposals.”

Lance Kilpatrick, an official with AFSCME Council 3, said hundreds of workers have contracted COVID-19 on the job.

“There has been a rush to cut by [the Department of Budget and Management],” he said. “We were given an unreasonable timeline to bring our bargaining team together to negotiate, with little backup documentation to analyze and assess.”

“We said we could meet on June 25,” he added. “We were told it had to be the 24th or there would be no negotiating.”

Lawyer and lobbyist Bruce C. Bereano, a Hogan ally who represents the Maryland State Park Rangers Association and firefighters at Thurgood Marshall BWI Airport, called the state’s initial $672 million package of cuts “premature”.

“It’s early. It’s premature,” he told the panel. “You need further information, not only in terms of revenue estimates but what will be coming from the federal government… and whether there will be strings attached to it or not.”

Hogan noted that Maryland has reached agreements with two of its unions and hopes for successful negotiations with others. His spokesman, Michael Ricci, told Maryland Matters after the vote that the state has reached out to AFSCME, MPEC, AFT-Healthcare and the BWI Firefighters “to restart negotiations”.

Hogan cautioned that more than 3,000 state employees will lose their jobs if the board doesn’t restore the cuts it deferred on Wednesday.

“I just believe we have to move forward,” he said. “We did postpone $205 million of these cuts. … We have to find alternatives for that $205 million because I do not want to lay off 3,157 people. So just saying ‘let’s fund all these things’ is not an option.”

Appropriations Committee Chairwoman Maggie McIntosh (D-Baltimore City) scoffed at Hogan’s assertion.

“I think that’s one of those simplistic answers to try to get our attention, to paint this in the most dire of circumstances possible,” she said. “There are a lot of different moves in this card game that need to be made.”

“I’ve never known $205 million to equate to that many people losing their jobs,” she added.

McIntosh noted that Hogan vetoed measures earlier this year that would have raised additional revenue, including one bill that have boosted the tax on tobacco and another that would have taxed digital advertising.

Maryland voters will decide on whether to legalize sports gambling this fall, she added.

Hogan campaigned against tax increases in 2014 and has waved off any suggestion that the state boost revenues during his six years in office.

“Without this board showing strong leadership and making these tough decisions, the budget ramifications will be much more painful,” he said.

In a bid to underscore his support for education, Hogan said he is “committed to doing everything possible to maintain level funding for K-12 education for next year, with no reductions.”

Kopp praised Hogan for pushing the White House and Congress to provide additional resources.

“The governor’s pressure on the president and on the Republican-led [U.S.] Senate can make the difference,” she said, “because I can’t believe there’s a governor in this country that doesn’t understand the problems that we’re facing.”

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Divided ‘Works’ Panel Approves Big Budget Cut; Hogan Warns of Layoffs