As other state agencies deal with the latest round of budget cuts from Gov. Martin O’Malley, the Maryland Insurance Administration says its “very lean” operation and funding from premium taxes is saving it from further belt-tightening.

Martin O'Malley

The Maryland Board of Public Works approved O’Malley’s plan to trim $454 million from the fiscal 2010 budget as the latest step to address a projected budget shortfall of $700 million. The latest round of cuts, along with prior budget trimming measures announced in July, reduce the state’s fiscal 2010 budget by $736 million.

The state recently announced it would need additional cuts – estimated at $230 million – to balance the current budget. At press time, cuts had not been defined.

The latest measures include furloughs and salary reductions for state workers.

The furlough plan, estimated to save $75 million, prevents the layoff of nearly 1,500 state employees, according to the governor’s office. For employees earning $40,000 to $49,999 annually, they must take three furlough days; those earning up to $99,999 will take four furlough days and anyone earning $100,000 or more in annual salary will take five furlough days during the fiscal year, which runs until June 30, 2010.

State operations also closed the day before Labor Day and will do so again on the day prior to Thanksgiving Day, Christmas Day, New Year’s Day and Memorial Day.

Karen Barrow, spokeswoman for the MIA, said the department’s 290 employees will participate in the salary reduction and furlough plan.

“Even in these tough times, the agency intends for these reductions to have as minimal an impact to licensee and consumer services as possible,” Barrow told IFAwebnews.com

She added that the agency “operates very lean” while also a “significant contributor” to the state’s general fund through premium taxes from insurance companies.

“As an independently-funded agency, the MIA, at this point, has not been asked to make other budget or staff sacrifices,” Barrow said.

Employees earning less than $40,000 per year will three more days of salary reduction and two days leave while those earning more than $40,000 will take five-day pay reductions.

This story originally appeared in the October 2009 print edition of Insurance & Financial Advisor.