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Unions and environmental groups that have fared well under the O'Malley administration are going on the defensive as a state that is accustomed to moving forward on budget priorities prepares to take a step back.

Gov. Martin O'Malley (D) is preparing more than $400 million in budget cuts, which will be on the table at the Board of Public Works' next meeting on Oct. 15.

As groups that have pushed a progressive legislative agenda look at ways to plug holes in a gap that could grow to $1 billion by fiscal 2010, some are coming back to one answer: approval of the constitutional amendment to legalize slot machine gambling.

While unpopular with many progressives, opponents to the proposal that would put 15,000 machines at five locations in Allegany, Anne Arundel, Cecil and Worcester counties and Baltimore city have come up with few viable alternatives, said Fred D. Mason Jr., president of the Maryland and D.C. AFL-CIO.

"The slots referendum is one way of closing a deficit in the state budget," Mason said. "If other people have other ideas they have to get out there and spend the political capital, garner the political will and pass the legislation."

Republican lawmakers began trying to do just that last week when the House Republican Caucus came out in opposition to the slots referendum. Instead, Republicans are proposing a slots bill for the 2009 legislative session that does not require voter approval.

The bill resembles legislation Republicans proposed during last year's special session. It projects raising $850 million through licensing fees, compared to $90 million up front in the governor's plan.

The state will need that up-front money to plug the budget gap, said Del. Anthony J. O'Donnell (R-Dist. 29C) of Lusby.

Some groups are still divided over whether slots are the way to go.

Progressive Maryland's Board of Directors has twice discussed whether the group would take a position on the referendum, with no consensus, Executive Director Sean Dobson said.

Without a position on slots the group is continuing to press lawmakers to pass combined reporting legislation. The proposal would total the profits of multistate companies and then apportion them according to property, payroll and revenues they report in Maryland.

"Before you start cutting health care to poor kids and Bay cleanup, let's make sure that big corporations are complying with Maryland tax law and paying what they should pay," Dobson said.

Maryland would have collected $29 million to $58.3 million more revenue in fiscal 2008 with a combined reporting law, according to a report released by Sen. Paul G. Pinsky's office last week, based on data from the Comptroller's office and the nonpartisan Department of Legislative Services.

Combined reporting legislation is worth looking at "but it's actually nibbling around the edges," O'Donnell said.

The answer is not new revenue, it's reining in spending, he said.

"Freezing state spending at its current level for one year and having a more managed and reduced rate of growth in the budget in the out years — that will be the best insurance for funding Maryland's priorities," O'Donnell said.

What those priorities are depends on who you ask.

Unions fear that defined benefit pensions could be in jeopardy. With the stock market on a roller coaster ride in recent weeks, workers have been thankful that their retirement is "not subject to the whims of the market" as are those of people with 401(K) plans, Mason said.

Environmentalists want Program Open Space and funding for the Chesapeake Bay Trust Fund preserved.

Funding for Bay cleanup, which was cut from a proposed $50 million to $25 million this year, is crucial to maintaining tourism and fishing industries, said Pinsky (D-Dist. 22) of University Park.

"If we don't clean up in the front end we're going to have to clean up in the back end," he said.

Environmental groups fear cuts to staff at the Maryland Department of the Environment that monitor air and water pollution and enforce some development laws.

"They already don't have enough inspectors to keep an eye on all the facilities in Maryland," said Brad Heavner, state director of Environment Maryland.

The General Assembly's presiding officers have set limits on legislative price tags in recent sessions. Pinsky said he expects that to be the case in 2009.

"I think any new initiatives are going to be few and far between," he said. "I think everyone needs to understand that it can be policy but it can't be new money."

The state should use all of its rainy day fund except for what it is required by law to keep in reserve, Pinsky said.

But scrounging for dollars is not going to solve the problem, lawmakers say. And groups are steeling themselves for tough choices that lawmakers will have to make on budget cuts.

"Individual families make those choices," Mason said. "We're at a point now where we have to make that choice about our state's economy. I'm not sure that doing nothing is an option."