State estimates $2 bil. budget deficit next year

University officials are bracing for another devastating cut after revenue estimates released yesterday revealed an astonishing budget shortfall for next year.

In addition to a $2 billion gap in next year's budget, $200 million will need to be trimmed from the state's treasury this year.

Budget analysts are recommending yet another cut of nearly $300 million in order to provide cushioning should the fiscal situation get worse. But Gov. Martin O'Malley has not determined when the cuts will be made or which programs and agencies could be on the chopping block, according to spokeswoman Christine Hansen. The state has already cut more than $700 million since the beginning of the fiscal year in July.

The next cut to the university could hurt more than the $86.2 million that was slashed last year because the college's fund balance is gone, meaning all the money will come directly from academics, facilities and day-to-day operations.

No one is surprised by the dismal figures, despite some economists arguing the recession has bottomed out. Even though the stock market and real estate sector are showing improvements, it will be months before this translates into higher state revenues from income or sales taxes.

University System Chancellor Brit Kirwan said he expects O'Malley to authorize another trim before January, when the governor will release his 2011 budget proposal.

"They will want to make the cuts as quickly as possible," Kirwan said. "As bad as the cuts have been already and as much damage as they have done, we have been, in relative terms, treated well in the past. We are confident we will be in the future, but exactly what this would mean in dollar terms, it's just too early to say."

The university will rely on the measures it has already taken to weather the storm, university President Dan Mote said. Individual departments have already been asked to create plans to cut their budgets by 10 percent, which were turned over to Provost Nariman Farvardin last week.

The university is also implementing furloughs. The Board of Regents, a 17-member panel of gubernatorial appointees who oversee the university system, is expected to vote to turn over approval of the furlough plans to Kirwan at a meeting tomorrow to speed up the implementation process.

"We had department and unit heads prepare budget reductions that were greater than we needed," Mote said. "We're going to try to stay ahead of where projections seem to be, which is what we've been doing."

Sen. Jim Rosapepe (D-Anne Arundel and Prince George's), who represents College Park and is a fierce advocate for public universities, said that everyone will be looking for opportunities to save money in higher education.

"I don't think there's any doubt about that — whether there will be any additional cuts to the universities," he said. "The largest cuts they have had to endure so far have not been from direct services but from the fund balance."

The cuts, which will likely impact public health, safety and other state services, come at a perilous time for O'Malley, who is expected to stand for re-election next year. The governor said he has tried to be fiscally conservative as the economy wrecked havoc with the state's treasury.

"To date, we have cut state spending by $4.3 billion, bringing spending below 2007 levels by $434 million," O'Malley's office said yesterday in a statement. "We have eliminated 3,200 state positions from one of the leanest state governments in the nation. And after two years of holding local jurisdictions harmless, we cut aid to local communities by more than $200 million.

"We have chosen to act responsibly. Yet, at the same time, the $4.3 billion in cuts we have already made have had real consequences for our families and our communities, and the unfortunate reality is that more cuts will be needed."

For Rosapepe, the answer to the seemingly endless vicious cycle of revenue shortcomings and subsequent cuts is simple: mandated state funding for the university system.

"I hope this current crisis helps wake people up to the fact that the university needs to work in an aggressive and systematic way for permanent funding," he said. "Until we do that, we'll continue to go through these boom and bust cycles."

astice@umdbk.com