Painful Choices in Annapolis

December 07, 1990

We now know the extent of Maryland's budget deficit -- $423 million this year and another $204 million for next year. And we know the response chosen by Gov. William Donald Schaefer to erase that red ink, which includes the dismissal of 1,800 state workers. The next step is up to legislative leaders. They must either support the governor's approach or devise alternatives to help restore state government's financial health.

Governor Schaefer described the pending layoffs as the most painful decision he has made in his long political career. But it must be done to offset what state Treasurer Lucille D. Maurer described as a "toboggan slide" in revenues.

The Persian Gulf crisis has sent tax receipts plunging more rapidly than at any time in 50 years. Sales taxes are expected to decline in 1991 -- the first time that has happened. Employment will decrease for the first time since 1982. Wherever you look, the forecast is grim.

Faced with this depressing reality, the governor has responded with a measured approach combining belt-tightening and one-time revenue gains. There is no way, though, he can balance the state's fiscal 1991 books without firing workers.

His proposal includes cutting agency budgets by 5.5 percent, stopping new construction, cutting local aid by 10 percent and taking another $16 million from higher education. He also needs General Assembly approval to dip into the "rainy day" reserve fund for $75 million, shift corporate taxes out of the transportation trust fund, shift $40 million from the Open Spaces account and use $13 million recovered from savings and loan bailouts.

If legislators refuse to approve these plans, the governor apparently has little choice but to fire more state workers. Such layoffs could be avoided only by a raise in income and sales tax rates, which the governor and legislators have vowed not to do.

Downsizing government is inevitable. But legislators might want to take a closer look at some partial remedies in the revenue ctor, even if they fall short of the overall tax reforms suggested by the Linowes Commission. Removing just a few of the products exempted from the sales tax -- such as cigarettes -- would raise millions, for instance. That would make downsizing the next budget less painful.

More bad news may surface as Governor Schaefer puts together the fiscal 1992 budget. Another $200 million in programs will have to be cut, or new revenues found to keep spending in balance. But the situation is far from hopeless. Maryland's deficit is less than Virginia's $1.4 billion or Pennsylvania's $1 billion shortfall. Maryland is in the mid-range of troubled states. The governor's sensible and sensitive approach deserves legislative support. He is making tough decisions in these tough economic times.

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