Marylanders in recent weeks have been subjected to a chorus of dire economic forecasts. First came news of a $150 million budget deficit, which, within a month had ballooned to $180 million. Last week, the General Assembly's fiscal analyst, William S. Ratchford II, echoing growing pessimism among business leaders, warned that Maryland's shortfall would likely be closer to $250 million and could swell to $342 million.
Gov. William Donald Schaefer's aides moved swiftly, dismissing the report and making much of theie contention that Mr. Ratchford's projections have flown wide of the mark in recent years.
That the state's economy is in the throes of a tough transition, perhaps even teetering on the brink of recession, is abundantly clear. But the news isn't all bad. Maryland's jobless rate dipped slightly in August -- to 4.4 percent from 4.5 percent -- a good sign in the face of rising national unemployment. Equally heartening was last month's sale of $95 million in triple A-rated general obligation bonds at a time when many states, including New Jersey and Massachusetts, are steering clear of debt issues.
There isn't a state on the eastern seaboard that has escaped the harsh budgetary realities of a slowing national economy. Nearby Virginia is staring down a $1.4 billion shortfall in its two-year budget. And Massachusetts was forced to pare some $465 million in spending to balance its books. At this point, economists are divided as to whether Maryland has crossed the line into recession. Still, the state's strengths remain significant: a diversified economy, low unemployment and relatively high income.
Moreover, Governor Schaefer has reacted by freezing new hires, putting off equipment purchases and ordering cutbacks in agency spending.
Still, the road is likely to become bumpier in the months ahead, making this a time for hard-nosed priority-setting and decision-making. Of no small import are the tough choices facing voters in jurisdictions considering ill-timed revenue limitations.
State and local governments, meanwhile, face the difficult job of reconciling pre-downturn spending goals with the new economic realities, of balancing growing social needs against increasingly limited resources. Maryland's economic engine has stalled, but Annapolis is so far making the right moves.