Schaefer budget proposes no new taxes, little growth

February 02, 1991|By Peter Jensen | Peter Jensen,Annapolis Bureau of The Sun John W. Frece and M. Dion Thompson of The Sun's Annapolis Bureau contributed to this article.

ANNAPOLIS -- The Schaefer administration presented its fiscal 1992 budget to the General Assembly yesterday with a spartan bottom line: no new taxes and the smallest growth in spending since World War II.

Caught between the recession-spawned, slumping tax revenue and increasing costs for mandated programs such as welfare, the $11.56 billion budget pushes back spending to 1990 levels for most state agencies.

WK "All of us will have to roll up our sleeves over the next fiscal year,"

Charles L. Benton Jr., secretary of budget and fiscal planning, told reporters at a State House briefing. "We'll have to do more with less."

While the 2,109-page document offers no new taxes, it virtually begs for Gov. William Donald Schaefer's proposed 5 percent sales tax on gasoline. In part, that is because the administration proposes to transfer $76.6 million out of its already depleted Transportation Trust Fund and into the general treasury to help balance next year's budget.

Unless the legislature finds more money for its transportation program, fiscal 1992 budget cuts will bring a halt to all highway and bridge construction or maintenance and will mean no new mass transit projects for the foreseeable future, administration officials said.

The budget also does not include any of the $800 million in taxes proposed by the Linowes commission. Administration officials hope an austere budget will generate support for the Linowes proposal but are -- at least for the moment -- keeping the issues separate.

Both the gas tax and the Linowes bills are to be presented to the legislature next week. Along with increases in motor vehicle license and registration fees, the gas tax would raise an estimated $1.5 billion over five years.

Mr. Benton said the budget's meager 1 percent growth will cause a "terrific hit" on some departments, and reflects the smallest annual growth rate since 1945.

The proposed budget calls for 1,600 state jobs to be terminated, the vast majority of which are already vacant, and a similar number to remain vacant but left on the books in case of emergency.

Mr. Benton estimated that at least 74 people may actually lose their jobs by July 1, when the budget year begins.

Among the first reported casualties of budget reductions:

* No cost-of-living or incremental pay raises for state employees, except for the governor and other elected leaders. State employees will also have to pay more for health benefits and work a standard 40-hour week.

* A cap on general public assistance and disability programs. The disabled will have to wait longer to qualify for benefits and some needy may be refused public assistance.

* The state's hiring freeze would continue under the budget department's control, though Mr. Benton expressed concern that state hospitals might jeopardize accreditation and the quality of patient care if they are not given exemptions.

* Drop all state funding for Baltimore's rat-eradication program.

Presenting their pie charts and bar graphs on the fiscal 1992 budget to reporters yesterday, state officials had difficulty saying precisely how state services will be affected by the cuts.

Some of belt-tightening efforts are simply a continuation of cutbacks imposed earlier when the administration eliminated a $423 million deficit in the current budget. Other moves may not be discerned until legislators have a chance to grill Cabinet secretaries and agency heads in committee hearings.

A few agencies will grow next year, most as a result of mandated increases over which the governor has little control. The state's court-ordered prison expansion, for instance, will mean the hiring of new guards while programs like Medicaid and unemployment will grow as need for them escalates across the state.

Administration officials said that while those programs tied their hands when it came time to script a 1992 spending plan, the governor found modest amounts of money for new initiatives. He wants it spent on land-use planning recommended by his "2020 Commission" and on new accountability standards for public schools.

Within hours of receiving copies of the budget, legislators were expressing displeasure with some of the administration's budget-balancing techniques, particularly the transfer of money out of the already moribund highway construction program.

Budget planners have also assumed that the purchase of a new computer will substantially increase lottery receipts and that hiring more auditors in the comptroller's office to enforce state tax laws will raise about $30 million.

Pessimistic as the administration's revenue forecasts are, the legislature's chief fiscal adviser told members of the House Appropriations Committee yesterday that the forecasts are not pessimistic enough. William S. Ratchford II, the fiscal adviser, said the administration overestimated by at least $135 million how much the state will earn from taxes next year.

"This budget is balanced upon revenues that don't exist and upon a transfer from the [Transportation] Trust Fund that's not going to occur," said Delegate Timothy F. Maloney, D-Prince George's.

Mr. Benton said he does not expect next year's revenue estimates to be significantly lowered when the Board of Revenue Estimates meets later this month. Besides, he said, "there is little in this budget that can be cut."

Nevertheless, members of the legislature's two budget committees, who have two weeks less than usual to review the late-arriving budget, said they are ready to cut $211 million or more from the budget to offset the discrepancies in revenue estimates.

"I think anything is a possibility at this point," said Sen. John A. Cade, R-Anne Arundel. "I can tell you we're going to do a hell of a lot of cutting before we start talking about raising taxes."

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