O'Malley Unveils Budget Proposal

In Maryland, Gov. Martin O'Malley is proposing nearly $1.5 billion in cuts without raising taxes. O'Malley says nothing was spared, and federal stimulus money saved the state from having to make these cuts the past two years.

"We're balancing more than a budget here. It's a real balance in needs and priorities," he says.

The governor will seek to merge certain commissions into state agencies, as well as hold the line on education funding -- meaning schools will receive the same amount they got last year, instead of the usual increases. But nowhere will budget cuts be felt more than the state's Medicaid program.

"We would like to be able to provide better reimbursement rates for doctors and providers who see patients covered by state Medicaid. We would like to be able to do that, but we can't right now," O'Malley says.

As for pensions for state workers, the governor wants all future employees to contribute more to their pensions, and reiterated his stance that for now teacher pensions should not be shared with local governments.

But some lawmakers, particularly in the Senate, are expected to push a bill that would share teacher pensions. Local governments are set against that because it would increase the rising budget deficits they are already facing.