1. PRESENTATION OF FY10 PROPOSED BUDGET House Democratic Caucus January 27, 2009

2. Maryland’s Current Outlook • State facing a $2B deficit • Without 2007SS, could be a $4B deficit • To maintain approved FY09 level services, budget would need to increase 5.6%, or $1.175B • Governor has proposed a negative growth rate – first time in MD history • Proposed FY10 budget below FY09 and FY08 spending levels

3. FY09 & FY10 Shortfall • Budget Reductions $1.195 • FY10 Cuts ($1.041B) • FY09 Future BPW Cuts ($ 154M) • Fund Balance Transfers $ 510 • One-Time Transfers from Accounting Reserves $ 380 • Planned FY09 Reversions $ 73 • Two-Time Federal Stimulus $ 350 • General Fund Deficiencies - $ 93 TOTAL $2.415 Closing Balance 46

4. State Govt Contributes First • FY09 BPW cuts = $420M • State employees furlough for 2 – 5 days • No COLAs or increments • Cuts to benefits, incl. deferred comp • Layoffs in October and possibly 700 more • Longer shifts instead of overtime

5. FY 10 Proposed Reductions • Local Aid Reductions 298 • Fund PAYGO/ICC with bonds 107 • No Advance of OPEB Liabilities 100 • Layoffs / No Increments 95 • Freeze Nursing Home & Physician Rates 81 • Abolish 1000 Vacant Positions 30 • 12 Hour Shifts for Corrections 8

6. Funding Our Priorities • K-12 Education and Higher Education • $932M increase from FY08 to FY10 • Total K-12 = $5.4B • Total Higher Ed = $1.4B • Public Safety • $160M increase from FY08 to FY10 • Total = $1.4B • Healthcare • Total = $5.7B

7. Proposed Budget Funds Priorities • K-12 Education increases $68M including teacher pensions (22% increase / $137M in one year) • Fourth straight year of tuition freeze • Maintain current healthcare expansion • $266M for school construction • $221M for higher ed construction & $88M for community college construction • Rainy Day Fund in tact