ANNAPOLIS – Maryland is freezing new hires, trimming agency budgets by 1.5 percent and deferring $65 million in capital projects to cope with the economic fallout of the Sept. 11 terrorist attacks.
The measures will squeeze $205 million from budgeted state spending to cover soaring security costs and plunging revenues related to the terrorist hijackings, Gov. Parris N. Glendening announced Wednesday.
“Our economy is and remains very strong, (but) we are seeing a slowdown in revenue and significant security costs,” the governor said, outlining an early plan to cut expenditures before the December budget estimates.
In fact, the nation’s economic slowdown prior to the Sept. 11 attacks has turned into an economic standstill, the governor said.
There also will be no spending for new programs of any size next year, the governor said.
Heightened security across the state has cost $6 million and that will grow to $24 million by the end of the fiscal year on June 30, 2002. That does not include what the federal government pledged to pay for sending National Guard troops to police the airports, said Eloise Foster, secretary of the Department of Budget and Management.
Those figures do include the cost of providing more security personnel at Maryland airports, intensified truck inspections and continued health benefits for state employees on active military duty. The measures were instituted since Sept. 11, when four hijacked jetliners slammed into the World Trade Center, the Pentagon and the Pennsylvania countryside in an attack linked to Saudi exile Osama bin Laden.
The General Assembly may approve other security measures, which would not be covered by the $24 million figure, Glendening said.
Lawmakers are considering making some new law enforcement positions permanent ones and enhancing penalties for terrorist acts or threats that turn out to be hoaxes.
Glendening said his cuts will cover both current security measures and the slump in tax revenues, which are down about $53 million from August and September of last year, according to the comptroller.
Deferral of capital projects will raise $65 million of the total, but selection of cuts from the total $133 million in projects won’t be made until December, said Foster.
Maryland is in much better shape than some states, Glendening said. The cuts are “necessary for fiscal health but not devastating,” he said. “We are taking prudent and significant budget actions now so that we will not have to resort to draconian cuts in the future,” Glendening said.
A clearer picture of the economic impact of the Sept. 11 attacks is expected in December after the annual budget estimates, said Mike Morrill, the governor’s spokesman. The economy was slowing before the attacks, but “without Sept. 11, I don’t think any of us would be standing here for this,” Morrill said.
The airline, travel and tourism industries have been particularly hard hit in Maryland, Glendening said. Tourists have been slow to return to the Washington area, and the closure of Reagan National Airport exacerbated the region’s suffering.
Yet the governor seemed pleasantly surprised that in the five weeks since the attacks there have been 20,811 unemployment claims across the state, an increase of only 1,664 over last year.
Sales tax revenues are still up slightly over last year, due in large part to the sales tax free week in August, Morrill said, but “we won’t see improvement in September. If anything, we will see worse numbers.”