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Maryland business leaders this week expressed concern over state budget cuts hurting technology research, tourism and small-business assistance programs.

The changes, approved recently by the Board of Public Works, include reducing stem cell research funding by $1 million, or 5 percent, to $18 million. The reduction starts this fiscal year.

"Any cuts in research over time will have an impact on technology development," said Steve Kozak, executive director of the Greater Baltimore Technology Council.

The cuts are particularly troubling when one takes into account how well Maryland's technology community fares nationally, he said. Maryland ranked second in the nation — behind only Massachusetts — in the Milken Institute's technology and science index released this year, up from fourth in 2004. The ranking by the Santa Monica, Calif., think tank scores states' technology and science assets on elements such as quality of facilities, access to venture capital, research and development, and workforce.

While Milken researchers cited Maryland's improvement in its ability to attract high-tech businesses and new projects that link research institutions with industry, cutting funding for science research could damage the state's high showing, Kozak said.

"We are well-poised because of our talent, the university system, federal labs and other factors," he said. Research funding such as that for stem cells can help biotechnology and other science companies "stay one step ahead," Kozak said.

Other reductions include $2.15 million less for the Maryland Tourism Development Board; $2.3 million less for the Maryland State Arts Council; $272,590 cut from workforce quality grants; and $182,080 trimmed from small-business assistance grants. The Nano-Biotechnology Initiative and the Maryland Industrial Partnership Program were each slashed by about $600,000. Those reductions were effective in this fiscal year's budget.

While the state tourism board's funding is reduced, local tourism programs will not be affected by the cuts, according to a document from Gov. Martin O'Malley's office. Many of the cuts were in areas that provide a good return on investment, said Kathleen T. Snyder, president and CEO of the Maryland Chamber of Commerce.

"Tourism and biotechnology research bring money back to Maryland," she said.

But Snyder said she understood the pressure state officials are under, after the state Department of Legislative Services recently projected that Maryland could see a $432 million budget shortfall for fiscal 2009 and more than $1 billion in fiscal 2010 if the economy continues to worsen. The Board of Public Works approved about $347 million in budget cuts, including some $297 million in general funds and $50 million in special and federal funds. State law requires the operating budget to be balanced.

"As our national economy has faltered, states across our country, like families across our nation, are now faced with the hard decisions necessary to balance our state budget in very difficult economic times," O'Malley (D) said in a statement.

Families and businesses are having to make difficult cuts, as well as difficult choices in prioritizing where revenues will go, Snyder said. "Everyone is having to cut back," she said.

With a lower unemployment rate and higher family income than most states, Maryland is better positioned than many other states to weather the leaner times, she said. Allowing slot machine gambling, which voters will decide on Tuesday, would provide a needed boost to the state budget, Snyder said.

The state Department of Business and Economic Development eliminated three filled positions and 11 vacant positions through the cuts, said Karen Glenn Hood, a DBED spokeswoman.