O'Malley: Education, rainy day fund off limits

Friday, Oct. 23, 2009

Union members used the cold rains that forced their news conference indoors Thursday as a metaphor for the fiscal storm that is battering Maryland's budget.

"It is time to dip into the rainy day fund because it is raining out there, and we need some shelter from the storm," said Patrick Moran, state director of the American Federation of State, County and Municipal Employees, which represents about 30,000 state workers.

"Even if we were to wipe out our entire rainy day fund, we'd still have a lot of cutting we'd have to do," O'Malley (D) said. Officials have to make another $300 million in cuts because of the budget shortfall.

Taking from the rainy day fund would require legislative approval — something the General Assembly cannot give until it reconvenes in January. Last week, all three bond rating agencies reaffirmed Maryland's triple-A bond rating, which allows the state to borrow at the most favorable rate.

The bond rating sets the stage for the state to balance its budget in a fiscally responsible way and to maintain a rainy day fund that exceeds 5 percent of the state's general fund, as required by law, O'Malley said.

Legislation passed in 2006 set a rainy day fund target of 7.5 percent of the general fund. That has yet to be achieved.

"There were those two years ago who said we should dip into the rainy day fund, and we saw that we did the right thing at that time to protect it," O'Malley said.