Board approves $362 million in budget cuts
Medicaid, mental health and higher ed slashed; Latest round pushes FY10 cuts over $1B
ANNAPOLIS Cuts to Medicaid reimbursements, mental health services eligibility, aid to higher education and new vehicle purchases along with the elimination of 112 state jobs top the list of $362 million in reductions to the fiscal 2010 budget approved Wednesday by the state Board of Public Works.
"With today's actions our state government general fund spending will now be $500 million less than it was three years ago," said Gov. Martin O'Malley (D).
It is the first time since the Great Depression such a spending reduction has happened, O'Malley said at the beginning of the board's meeting, after which he took no questions from reporters.
The latest cuts are on top of $736 million in cuts to the fiscal 2010 budget made over two rounds earlier this year. They leave the state with a $123 million cushion against future revenue shortfalls.
More than 40 percent of the savings plan $258.8 million comes from budget transfers and reversions. That includes $129 million in corporate tax revenues that the Department of Budget and Management hopes to reap from Constellation Energy Group's recent sale of its nuclear energy assets to Electricite de France and $11.6 million in projected revenue from the state's recent tax amnesty.
Other savings include transfers of $25 million from the land records fund and $25 million from the rainy day fund to the general fund.
Among the cuts approved Wednesday are a $21.3 million reduction in Medicaid payments to hospitals and $7.3 million in savings based on lower-than-expected enrollment in the Maryland Children's Health Program.
Another $6.5 million in savings will come from increased scrutiny of mental health service eligibility and of claims for occasionally unnecessary services. The savings represent less than 2 percent of mental health claims, according to a state budget department analysis.
The plan also includes about $3 million in savings from suspending non-essential new vehicle purchases and reducing travel expenses. Of the 112 job cuts, about 70 of the positions were filled.
The Department of Health and Mental Hygiene will absorb the largest number of job losses. That includes cutting 21 positions at the John R. Gildner Regional Institute for Children and Adolescent in Rockville. Services at the center for children with emotional disabilities will be cut from 56 to 32 beds, with patients transitioned to private-sector residential treatment centers at lower costs.
Advocates for the developmentally disabled, who suffered $29 million in cuts earlier this year, rejoiced Wednesday when they were spared from the latest round of cuts. Providers and families have held town hall meetings around the state over the past month highlighting the 19,000 people on a state waiting list for services. Democrat and Republican lawmakers alike have called for services to be spared from further cuts.
Higher education took $32 million in cuts, including $25 million that the University System of Maryland will transfer to the state general fund. The transfer is 4.2 percent of the state system's fund balance and is in addition to $33 million the system has already given back to the state.
Another $7 million will come from Sellinger Program aid to the operating budgets of private colleges and universities. That is on top of a $7 million cut made earlier this year, an amount that could be offset by stimulus aid boosts to federal Pell grants.
The cut will hurt the institution's ability to provide financial aid to students who are increasingly utilizing the grants in order to pay tuition, said Tina Bjarekull, president of the Maryland Independent College and University Association.
"The financial aid is out the door," Bjarekull said. "What it will do is we will have less financial aid next semester."
The cuts come the same day the Maryland Higher Education Commission reported fall enrollment of undergraduate and graduate students at the state's public and private four-year colleges and universities and at two-year community colleges increased by 5.2 percent to a record 354,858 students.
The board also affirmed a decision made in August to close the Upper Shore Community Mental Health Center in Chestertown.
A coalition of advocates, families and employees of the center drafted a plan that would have cut back on jobs and combined care units at the state-run psychiatric hospital, which serves 198 patients and has about 85 employees.
Comptroller Peter V.R. Franchot (D) moved to adopt the plan, after a lengthy hearing on the issue, but neither O'Malley nor Treasurer Nancy K. Kopp (D), his colleagues on the three-member board, seconded the motion.
Instead, O'Malley and Kopp sided with a plan presented by state health Secretary John M. Colmers that transitions patients from the center's substance abuse unit to a county-run program at the facility while moving mental health inpatients to community-based programs.
That plan is expected to save about $5 million. Colmers said the amount was significant because the state still needs to cut $1.5 billion in fiscal 2011, and about a third of that will come from health programs. O'Malley will present his draft of the 2011 budget when lawmakers return to the State House in January.