O’Malley’s budget cuts transportation, Medicaid reimbursements

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House Speaker Michael E. Busch, D-Anne Arundel, said Friday morning Gov. Martin O’Malley‘s budget proposal would cut state and highway transportation dollars, K-12 education funding and Medicaid reimbursements to hospitals.

The budget also includes a 3 percent hike in college tuition at state universities, and changes to public employee pensions, which would require state workers to pay more to maintain the same level of retirement benefits.

“I think we’ll tinker with all of it,” Busch said. “I think we’ll definitely tinker with Medicaid.”

He said hospitals would see $250 million less in reimbursements in fiscal 2012 than they will this budget year.

O’Malley is scheduled to release his budget proposal this afternoon. He has called his budget, which will have to bridge a $1.6 billion deficit, “the first word, not the last word.”

City and county governments can expect to see the same reduction in highway aid as they did the last two years — a 90 percent cut to the funding formula. And Busch said some state highway projects have been cut as well.

Some lawmakers have pushed to increase transportation funding this year. Senate Majority Leader Rob Garagiola said he will introduce a bill to raise between $400 million and $600 million annually for transportation projects.

O’Malley, during an hour-long interview on WTOP this morning, acknowledged the need for increasing transportation funding.

“We do have a huge backlog of [transportation projects] that need funding, including mass transit,” he said.

State aid to public education would be less than this year, Busch said.

“I actually thought there would be more cuts education,” he said. “We knew there were going to be tough decisions that have to be made.”

Asked if the proposal made increases to the alcohol or gas tax more palatable, Busch said: “I don’t see a groundswell of anybody in the General Assembly that wants to raise revenues.”