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FY 2008 Budget Press Conference

First, I want to thank all of the people who worked on this budget. There are a lot of good people doing important work in our State government – people like our Budget Secretary Eloise Foster, who are coming in with our Administration, and people who have worked for years to make Maryland a better state. Thank you for your good work.

Our State budget is one of the clearest reflections of our values as a state. We have limited financial resources, and we are forced to make choices. And we submit this budget – after having been in office since yesterday – knowing full well that we cannot accomplish everything we want in the first year – that’s why they give us four years.

The story of this budget is straightforward:

We are funding our state’s priorities in a fiscally conservative budget that is growing at less than the rate of inflation – by just 2.5% – recognizing the $1 billion budget deficit challenge we face next year.

Responsible Fiscal Management

Structural budget problems require structural solutions. And the first step when you’re in a hole is to stop digging. So we are reducing the rate of spending growth.

This year’s 2.5% budget growth represents a smaller increase than 9 of the last 10 budgets – and is much less than last year’s 12% increase.

This budget increases by less than the Spending Affordability limit set by the General Assembly.

And we are closing this year’s $400 million gap by containing spending. We are not proposing any new taxes.

We’re also saving for the future – with $674 million in the Rainy Day fund and $100 million for future retiree health care costs – to preserve our AAA bond rating.

Within this tight budget, we are investing in our priorities in education, public safety, the environment, health, jobs and economic growth, and transportation.

Total Budget Pie Chart

As you can see the budget is focused primarily on those priorities.

25% for heath, 22 percent for K-12 education, 15% for higher education, 13% for transportation, and human resources, public safety and the environment.

Capital Budget Pie Chart

The capital budget is focused heavily on education, health, the environment, public safety and economic growth – as well as transportation.

All of these investments are intended to make Maryland stronger and to increase the opportunities available to our citizens – from childhood through retirement.

Education

In K-12 education, as you’ve all reported, we will keep our promise to invest $400 million in school construction – to make up for the years when the state fell short in that responsibility.

This year’s $680 million boost in educational funding – with the final year of the Thornton reforms – represents the largest increase for education in Maryland’s history. And we will work with the General Assembly to pass legislation phasing in the GCEI formula, starting next year.

We also are investing in improving teacher pensions. We need to make clear that we value the work of Maryland’s educators – so we can retain the best teachers for our children.

Higher Education

In higher education, we are taking the first step to make a college education more affordable. We’ve put funding in the budget to enable an in-state tuition freeze – to give parents and students a breather after the large increases of the past few years. And we will work with the General Assembly to find a long-term solution to college affordability.

We’re increasing community colleges funding by 18% – plus we’re making the biggest capital investment ever in our community college campuses. Community colleges are a critical link to opportunity for many families. We need to recognize the contribution they make to our economy.

We’re increasing funding and financial aid for Maryland’s Historically Black Colleges and Universities – and building long-needed projects.

And we are increasing support for our research institutions – and science, technology, engineering and math programs – to help build Maryland’s economic future.

Public Safety

In public safety, we’re making our prisons more secure – with new facilities, 155 more correctional officers, and investments in security cameras and equipment.

We’re improving monitoring of sexual offenders with global positioning systems tracking – and providing local law enforcement with funding to do a better job.

We’re tackling the shameful backlog of DNA samples – to help ensure that criminals who commit violent crimes are taken off the street as soon as humanly possible.

And we are investing in treatment and mental health services in the Department of Juvenile Services.

Environment

We’re investing to protect and improve our environment… Restoring the Chesapeake Bay by improving wastewater plants and septic and sewer systems. And we’re increasing our investment in planting cover crops – one of the most cost-effective ways to improve the health of the Bay.

We are fully funding land preservation – Program Open Space, Agricultural Land Preservation and the Rural Legacy program.

And recognizing that our farmers are among the best stewards of our land, we are investing in the Agricultural Cost-Share Program – to support best management practices. We are increasing soil conservation services funding. And we are tripling the State’s investment in the Maryland Agricultural and Resource-Based Industry Development Corporation (MARBIDCO) – to support innovation.

Health

To improve our state’s health and expand our leadership in science and healing, we’re investing an additional $25 million in stem cell research – $10 million more than last year.

We are expanding our efforts to serve seniors, helping 39,000 older Marylanders with prescription drug costs.

We are restoring funding to care for legal immigrant mothers and children.

We are increasing drug treatment funding by $5 million.

And we are boosting reimbursement for doctors and mental health providers – and improving community health facilities – to strengthen Maryland’s healthcare system.

Transportation

As we undertake a comprehensive review of Maryland’s transportation system, we are investing $1 billion in roads across the state.

We’re investing in transit – to get cars off the road and reduce traffic.

We’re investing in dredging to make the Port of Baltimore more competitive.

And we are upgrading Thurgood Marshall BWI Airport – to support an important economic engine for our state.

Jobs and Economic Growth

And finally, we are making strategic investments to continue Maryland’s economic growth – and expand opportunity for our neighbors in every jurisdiction.

We’re investing to support small and minority business entrepreneurs – who represent a dynamic, growing segment of our economy.

We’re investing in bringing broadband service to rural communities – 26 Eastern Shore communities – to support employers and new jobs.

And we’re supporting technology transfer and incubator programs to help companies develop the new ideas the will build our economy.

Structural Deficit

In short, we are investing in our priorities. But given our State’s unaddressed structural deficit, not everything we want to do is possible. This was a difficult budget. And next year’s will be more so – as will the years that follow.

There is the temptation to say – well, there’s always a structural deficit, and it always get solved. But the magnitude of the problem is growing exponentially.

The $1 billion that was talked about as an overwhelming two-year problem a few years ago, is now what we will face in each of the next four years.

That’s why we are starting with just 2.5% budget growth – less than the rate of inflation, and lower than 9 out of the last 10 budgets. It’s time to begin turning this situation around.

Over this coming year, we will be making difficult decisions as we review every agency in government. And we will begin immediately to implement StateStat – to make sure our government is as cost-effective and accountable as possible.

Restoring fiscal responsibility to our state will not be easy. It will require sacrifice and honesty in facing Maryland’s challenges. And it will require that we begin – this year – on the structural reforms needed to deal with our structural deficit.

But we approach this task knowing that Maryland’s strengths are more than equal to the challenges before us. And we look forward to working with the General Assembly to complete this budget – and to make progress as One Maryland.

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