State deficit put at higher figure by analyst

October 03, 1990|By William Thompson | William Thompson,Evening Sun Staff

One of state government's top financial experts has estimated that the budget deficit at the end of this fiscal year will be at least $69 million higher than that forecast by the Schaefer administration.

The administration has estimated the deficit at $180 million.

William S. Ratchford II, director of the legislature's Department of Fiscal Services, presented his opinion yesterday to a special spending committee in Annapolis.

While there may be disagreement on how serious the deficit picture is, experts appear to agree that the dark clouds covering much of the nation's economy are drifting across Maryland.

On one hand, fiscal services estimates that the state's budget deficit this year will be about $250 million and could soar to $400 million if war erupts in the Middle East.

On the other hand, administration fiscal analysts say the budget shortfall probably will be less than $200 million. It could go as high as $270 million, they say, only if the country plunges into a yearlong recession triggered by unabated oil price increases.

And, on the sidelines, two University of Maryland instructors released a gloomy report earlier this week predicting that the state's economic base will continue to deteriorate while unemployment rises.

In anticipation of at least a $150 million shortfall, Gov. William Donald Schaefer a month ago ordered a hiring freeze in most state agencies and asked department heads to submit their own belt-tightening proposals.

Already the state has decided not to purchase 350 marked State Police cruisers, saving about $6 million, according to Dennis H. Parkinson, deputy secretary of the Department of Budget and Fiscal Planning. Parkinson said another $100 million in general funds could be saved by freezing most of the 5,000 state jobs currently open.

While the governor and his budget staff continued yesterday to review proposed budget constraints, the legislature's Spending Affordability Committee heard some of the gloomiest budget news of the year.

Ratchford, the legislature's top fiscal adviser, said hard decisions about the state budget must be made.

"You're beyond easy reductions," he said. "We have gotten our baseline expenditures above our baseline revenues. It's what you try to avoid in government."

Although Schaefer said the less alarming budget figures compiled by his staff are more accurate than Ratchford's, H. Furlong Baldwin, a Baltimore banker and one of the committee's citizen advisory members, warned against taking the budget woes lightly.

"This is not a time for heroes. This is not a year for optimists," said Baldwin. "I've never seen a time when we don't see the bottom. We're in a black hole."

Upon learning of Ratchford's shortfall estimates, Schaefer summoned reporters outside his State House office to give his impressions of the state's fiscal condition.

Asked if he were pessimistic, Schaefer replied: "If I join the criers and the whiners and the people who say the country's going to pot -- I don't see it that way yet. I'm not unrealistic. I know we've got trouble and I know we've got a softening of the economy. And I know we've got less money. But the state doesn't have to push the panic button. When you're down a couple hundred million in an 11 billion dollars [budget], that's not too bad."

Schaefer also disagreed with a report released Monday by university instructors Mahlon R. Straszheim and Lorraine Sullivan Monaco predicting that Maryland's economic slump will continue.

"What do we pay these guys for?" Schaefer asked reporters. "We don't need them. I could sit down and write a stupid report like that."

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