ANNAPOLIS, Md. — Gov. Martin O’Malley proposed a $39 billion budget for Maryland on Wednesday that closes a shortfall, in part by making a smaller payment toward long-term state pension reform.
O’Malley’s final budget proposal closes the $584 million shortfall without taxes or fees while also including record spending on K-12 education. The budget plan includes $289 million for school construction.
The Democratic governor said tax and fee increases from previous years of his tenure made new taxes unnecessary this year — an election year with all 188 seats in the Legislature and statewide offices to be decided in November.
“I don’t see that, because so much of the tough decisions that we made over these last few years have righted the ship, have gotten us on a better course,” O’Malley said when asked about potential tax increases.
Legislative leaders have talked about the possibility of reducing the state’s inheritance and estate tax. Maryland is one of only two states with both, and the presiding officers have talked about recoupling them to federal standards.
“I’m glad to work with them on it,” O’Malley said. “I mean, if both of the presiding officers and their legislative leaders feel strongly about it, I’m certainly glad to look at that.”
A 3 percent increase in state college tuition also is a part of the budget plan, as well as $4.3 million to begin phasing in universal pre-kindergarten for 4-year-olds by 2018. Lt. Gov. Anthony Brown has scheduled a news conference with legislative leaders to talk about the initiative on Thursday.
Another $4 million in the proposal has been set aside to hire 100 correctional officers, mostly for prisons in western Maryland, O’Malley said.
To tackle a budget gap in both the current fiscal year and the next, the governor decided to put a $200 million cap on the annual payment used to shore up the state’s pension system. In 2011, the state increased funding of the pension system to address unfunded liabilities. The measure put the state on track to fund the pension system at 80 percent by 2024. By making a smaller payment, the state will free up $172 million for the budget and delay reaching the 80 percent funding goal by a year, the governor said.
“And we believe that that is a prudent step to take,” O’Malley said.
Sen. David Brinkley, R-Frederick, was skeptical a year delay would be the only impact of dipping into the payment plan.
“Well, it’s always only a year,” Brinkley, the Senate minority leader, said. “A year here, a year there, eventually you’re up to a century.”
The governor also has set aside money for criminal justice needs in the aftermath of a contraband scandal at the Baltimore City Detention Center. In addition to the 100 added correctional officers, O’Malley has allocated $1 million to expand an internal investigation unit. Another $2 million has been earmarked to upgrade cameras and video recording equipment.
Maryland lawmakers will now spend much of the legislative session working on the budget plan.
The state will have $800 million in its Rainy Day Fund, under the governor’s proposal.
O’Malley, who has been beset by budget problems for nearly his entire seven-year tenure, said the executive branch is smaller now than any time since 1973.
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