State budget cuts spare small-business programs

January 01, 1991|By David Conn

Half a dozen state programs to attract, retain and build mostly small companies in Maryland largely escaped the budget-cutting ax that fell when the Schaefer administration announced $243 million in additional spending decreases Friday.

The latest deficit-reduction plan, announced Friday by Charles L. Benton Jr., secretary of budget and fiscal planning, included only about $4 million in cuts from Department of Economic and Employment Development programs to finance business development, a department spokeswoman said.

The Board of Public Works is scheduled to vote on the plan tomorrow.

An earlier list of possible cuts, revealed by William S. Ratchford II, director of the General Assembly's Department of Fiscal Services, named $21.5 million in DEED programs that could be cut.

But DEED Secretary J. Randall Evans responded with an unusual public appeal to reject the spending decreases, which ranged from an $11 million cut in funding for the Maryland Industrial Development Financing Authority to $6 million from the Maryland Industrial and Commercial Redevelopment Fund and $4 million from the Maryland Small Business Development Financing Authority.

None of those programs ended up on Mr. Benton's list, a compromise between Gov. William Donald Schaefer's original deficit-reduction plan and one developed by legislative leaders. A budget department spokesman said the programs are safe for now unless another round of cuts becomes necessary.

DEED spokeswoman Jane Howard said most of the $4 million in cuts were proposed for the Maryland Industrial Development Financing Authority, which lures businesses to the state and helps companies already in the state expand.

Mr. Benton also suggested that $1.2 million be cut from the Economic Development Opportunities Fund, known as the Sunny Day Fund, which is designed to attract businesses to Maryland. Under Mr. Ratchford's comprehensive list of possible cuts, the fund would have lost $3 million of its $5.2 million balance. The cut in the Sunny Day Fund requires legislative approval.

Other DEED programs listed to lose funds under the Schaefer administration plan are a cooperative marketing grant program ($100,000); county tourism and promotion grants ($107,000); and county export matching grants ($40,000). In addition, DEED's share of federal fund cost allocations would go up $300,000.

In a statement following Mr. Ratchford's list of possible cuts, Mr. Evans said that the "General Assembly's approach to resolving the state's budget deficit by cutting programs that are designed to stimulate the economy is completely illogical."

He cited the successes of each program, the number of jobs created and the resultant increase in Maryland's tax base, and concluded, "A one-time decrease in the state's capacity to finance business growth will hurt the state for years to come."

Some legislators responded that the DEED programs should be given a lower priority when the alternatives were to lay off workers or cut funding for Medicaid recipients or kidney dialysis patients.

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