Budget plan due to cost state Revenue drop is anticipated

October 02, 1990|By John Fairhall | John Fairhall,Evening Sun Staff Jay Merwin and Evening Sun county staffs contributed to this story.

WASHINGTON -- The federal plan to cut the deficit will cost Maryland several million dollars a year, but state officials say the bill could have been much higher.

"We're concerned about the impact on state revenues in a number of areas but, on balance, it's better than some of the other [plans] that were considered," Monica Healy, director of the state's Washington office, said yesterday.

Healy said the alternative to Sunday's last-minute budget agreement -- an across-the-board cut in government programs and layoffs of federal workers -- "would have been devastating."

Nonetheless, the agreement does hurt state finances at a time when Maryland officials are scrambling to cover an anticipated budget deficit that could go as high as $270 million.

A key part of the federal plan would increase the Medicare health insurance fees paid by senior citizens. Maryland pays such fees for impoverished Medicare beneficiaries, and will face an additional $2 million charge, Healy said.

Proposed federal excise tax increases on gasoline, alcohol and tobacco also will cost Maryland money because they're likely to reduce consumer purchases and hence lower the revenue Maryland collects from its own taxes, according to Healy and her deputy, Kenneth Mannella.

The officials said it's impossible to determine now how much revenue the state will lose. The largest loss will be from state gasoline tax revenues, they said.

Local governments also could feel a pinch.

Steven Powell, director of manpower and budget for Carroll County, said he was still calculating how much newly required Social Security payments would add to the costs of employing about 100 part-time workers.

Powell said the budget deal also could cut funds for a county housing rehabilitation program and a program that subsidizes weatherization of the homes of old and poor people.

Thomas W. Mullenix, assistant budget officer for Anne Arundel County, said, "We can't say at this time exactly what the impact will be."

Meanwhile, Maryland members of Congress expressed some unhappiness with the deal, especially the increases in Medicare fees. But most said they could live with it.

Rep. Helen D. Bentley, R-2nd, was an exception, terming it "just another smoke-and-mirrors deal."

"We're still not getting to the root of the problem," said Bentley, who favors a freeze on the federal budget.

Sen. Paul S. Sarbanes, D-Md., said, "We've got to have a budget package, otherwise we face fiscal chaos and a governmental breakdown plus considerable question around the world about our ability here to enact an economic policy."

"The Medicare part of it is very difficult," said Maryland's senior senator, "but the Medicare fund is in difficult financial shape. If the current trends on the Medicare fund continue, we're in for a very serious situation. And a good deal of the cuts we're talking about are designed to bring medical costs under some type of control."

"I think the negotiators have done a pretty good job of turning back a lot of the Republican efforts to get major provisions in to benefit the . . . wealthy at the very top of the income scale," Sarbanes said.

Rep. Tom McMillen, D-4th, said, "there's a lot of tough medicine in there [the budget deal]."

"In large part, I'd say I'm pleased we at least have an agreement; the alternatives would be devastating locally and unfortunately our federal employees would have taken the brunt.

"I think changing [the agreement] is really out of the question," McMillen said. "I think there may be some fine-tuning."

IT'S YOUR CALL/The budget

President Bush and congressional leaders have agreed to a plan to cut the budget deficit that would reduce expenditures and raise excise taxes. Do you agree or disagree with the following key elements of the plan:

* Reducing defense spending $67 billion over three years.

* Reducing the federal student loan program.

* Raising gasoline taxes.

* Raising taxes on beer, wine and distilled spirits.

* Raising taxes on cigarettes.

* Raising premiums for Medicare recipients and doubling the current deductible.

To register your opinion, call SUNDIAL at 783-1800 until 12 o'clock tonight. You must use a Touch-Tone phone. In Anne Arundel County, the number is 268-7736. The call is free. Once you are connected with SUNDIAL, enter 4600 from your phone and wait for instructions.

Results will be announced in this section in The Evening Sun tomorrow.

"It's Your Call" represents a sampling of opinion but is not a scientific poll. Its results should not be construed as having scientific accuracy.

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