Md. budget for '92 overestimates revenue, official says

January 24, 1991|By John W. Frece | John W. Frece,Annapolis Bureau of The Sun

ANNAPOLIS -- The General Assembly's chief budget adviser warned yesterday that the revenue estimates on which Gov. William Donald Schaefer is basing next year's state budget may now be too high by $75 million to $100 million or more.

William S. Ratchford II, director of the Department of Fiscal Services, said the economic effect of war abroad combined with a deepening

recession at home were not anticipated when the state's Board of Revenue Estimates delivered its official revenue projections in December.

Exactly how far out of line the revenue projections are will not be known for another two to four weeks, when actual figures for Christmas season sales tax receipts and other tax collection numbers are in, Mr. Ratchford said.

But he told members of the House Ways and Means Committee that receipts from personal income taxes, the state's largest single source ofrevenue, will be at least $40 million below the board's December estimates. Those estimates anticipate an economic turnaround by the end of 1991 and optimistically predict that personal income taxes will grow by 9 percent in the coming budget year.

"They're incredible. They're ignoring the real world," said Delegate Michael R. Gordon, D-Montgomery. "If you use wrong projections, you're just building in a [future] crisis."

Dennis H. Parkinson, Mr. Schaefer's deputy budget secretary, acknowledged that the revenue estimates the administration is using in preparing its fiscal year 1992 budget are probably too high. But he said it is too early to determine the magnitude of the error.

"Yeah, they may be overstated, but I can't put any numbers on it," he said. "Basically, you'd be extracting them out of thin air. Ratchford has no ability to come up with any firm number right now, and neither do we. But all of us over here probably feel that the numbers are a little bit too high," he said.

Mr. Schaefer, like other Maryland governors before him have done, is balancing his proposed expenditures for the budget year that begins July 1 with revenue estimated by the board in December. If revenue declines, or if he or the legislature believes revenue to be declining, they can jointly or independently cut the budget accordingly.

House Minority Leader Ellen R. Sauerbrey, R-Baltimore County, predicted that legislators would hedge their bets by acting conservatively.

Budget overruns by the Schaefer administration the past couple years have made lawmakers skeptical, she said. "The legislature tends to listen to Ratchford and have faith in Ratchford," she said.

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