State faces $75 million in new cuts Lawmakers fearing layoffs as deficit rises

February 22, 1991|By Peter Jensen | Peter Jensen,Annapolis Bureau of The Sun

ANNAPOLIS -- The slumping economy and declining state tax receipts will force at least $75 million more in cuts in the 1991 budget, General Assembly leaders learned yesterday, bolstering the likelihood of employee layoffs.

Emerging from a briefing with state Comptroller Louis L. Goldstein yesterday, legislators said the revised estimates showed the state was facing an additional $75 million to $110 million deficit this year and a net shortfall of $115 million to $135 million next year.

A sluggish holiday shopping season, rising oil prices and the plunge in consumer confidence have contributed to poorer-than-expected returns from sales, personal income and other state taxes, officials said.

House Appropriations Chairman Charles J. Ryan, D-Prince George's, said the revised revenue estimates came as no great surprise to legislators. "They are," he said, "the numbers we've been kicking around for a long time."

The further shortfall in the 1991 revenues is of greatest immediate concern to state officials, who have already had to trim spending and raid reserve accounts to offset an earlier $423 million deficit.

With less time left now in the fiscal year that ends June 30 and with the most obvious -- and least politically painful -- cuts already taken, legislators said the administration might have to resort to layoffs and furloughs to save money.

"New taxes aren't going to help you with this one," said House Speaker R. Clayton Mitchell Jr., D-Kent. "This is pure cost-cutting."

Sen. Laurence Levitan, D-Montgomery, chairman of the Senate Budget and Taxation Committee, agreed. The new estimates are troubling, he said, and layoffs or furloughs are "very possible."

"The fact that we would be in that situation doesn't really surprise us," Senator Levitan said.

Charles L. Benton Jr., secretary of the state Department of Budget and Fiscal Planning, declined to comment on the new estimates last night. He said that "the numbers are not official yet" and will not be determined until later today.

Gov. William Donald Schaefer had so far kept state employee layoffs to a minimum in cost-cutting moves. Recent budget cuts resulted in the loss of only about 60 jobs, with most coming from a meat inspection program.

The state government work force includes about 62,000 employees, with another 25,000 at the University of Maryland and about 10,000 contractual workers.

The shortfall in Governor Schaefer's $11.6 billion fiscal 1992 budget would appear to be less onerous. Legislators had already set a goal of $211 million in cuts to compensate for the $135 million deficit that had already been predicted by William S. Ratchford II, the legislature's chief budget adviser.

The higher cut is designed to prevent the Schaefer administration from transferring some $70 million from the transportation fund to help balance the budget.

In addition, deletions in the 1991 budget are likely to roll over into 1992.

Legislators are scheduled to meet again today to discuss the revenue figures and again tomorrow to discuss possible budget cuts with Governor Schaefer.

Final predictions are expected to be made public at Monday's meeting of the Board of Revenue Estimates.

Earlier yesterday, the Schaefer administration said it was backing off plans to reduce from 90 days to two weeks or less the amount of notice a state employee must receive before being laid off.

The regulations, which were offered by the state Department of Personnel last month, were scheduled for review by a legislative oversight committee today.

Personnel Secretary Hilda E. Ford said she decided to withdraw the regulations yesterday after meeting recently with Governor Schaefer, who asked that the agency review its entire policy on layoffs and budget cutbacks.

"He wants us to look at this as a total issue," Ms. Ford said. "We will be submitting that review to the governor as soon as possible."

Ms. Ford admitted that the decision would likely cost the state money since laid-off workers would have to be paid for three months of salary instead of two weeks or less.

The decision will not affect state workers in cases where funding for their jobs is deleted from the budget, however. That action, which is known as a termination, requires only two weeks' notice, according to an opinion written by state Attorney General J. Joseph Curran Jr. last year.

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