Still More Chopping


February 24, 1991|By BARRY RASCOVAR

MARYLAND'S economic forecasters could release additional bad news tomorrow afternoon that will make the task confronting legislative budgeteers more difficult.

Unless Comptroller Louis L. Goldstein comes up with a pleasant last-minute surprise (he's been known to do that in the past), state legislators will have to chop anywhere from $180 million to $240 million to make receipts equal expenses.

Never have lawmakers in this state had to come up with such massive reductions in spending. They have little choice if they want to avoid a general tax increase.

The House Appropriations Committee has two scenarios in front of it. One calls for $213.5 million in cuts; the other outlines a $308 million cost-reduction strategy. Between these two options, legislators will probably find the money to balance the budget.

Possible cuts include:

* Draining reserve funds, such as $6 million in unclaimed lottery prizes, $4.6 million in the Stadium Authority's debt service account, $20 million in the waterway improvement fund and $18 million in the Program Open Space account.

* Further reducing aid to public colleges by $20 million.

* Slashing another 2 percent, or $23 million, from agency budgets.

* Lowering the Ocean City beach replenishment fund by $1 million.

* Reducing local aid by at least $69 million, including extra school funds counties have earmarked for teacher pay raises.

This should close much of the budget gap. The remaining hole can be filled by turning to a few "revenue enhancers" outlined by the Linowes commission on tax reform.

The main targets: extending the sales tax to tobacco products ($36 million), snack foods ($30 million) and non-residential telecommunications ($8 million).

L That would be just enough money to avoid a gas-tax increase.

The governor wants to move $76 million in corporate tax receipts from the transportation fund into the operating fund as a budget-balancer. But this, in turn, depletes the transportation fund so badly that the administration is seeking a 6 1/2 -cent gasoline tax increase.

If legislators can balance the operating budget without this shift of funds, a gas-tax hike is far less likely this year. (Though lawmakers from Montgomery County strongly disagree and favor expanded road-building program that would require a large gas-tax increase.)

When lawmakers finish their work, there is certain to be considerable pain within state government. Layoffs are coming. The only question: how many? Furloughs -- perhaps one unpaid holiday a month -- might surface as an alternative.

Worthwhile social programs for those in need will shrink, even as demand increases. Some quality initiatives of recent years, especially in higher education, will be rolled back -- at least temporarily.

More ominous is the outlook for the next few years.

Gov. William Donald Schaefer's budget is built on a weak foundation. His revenue estimates appear out of sync with the bleak economic news of local bankruptcies, massive firings and a depressed real estate market that shows no sign of rebounding for some time.

The administration predicts, for instance, that income tax receipts in the fiscal year beginning July 1 will increase 9 percent.

That's preposterous. Maryland isn't going to jump into another boom cycle by the fall.

Forecasters also told the governor future sales tax receipts will rise 6.5 percent -- even though current receipts are $6 million less this year than last. A rebound of that size would signal a robust Maryland economy. It is wishful thinking.

These optimistic predictions are incorporated into the governor's budget. If his estimates are off by only a couple of percentage points, the state could end up in the red by hundreds of millions of dollars. If the estimates are badly off base, Maryland could find itself in its deepest fiscal hole ever.

Administration officials claim future revenue increases are achievable because they are based on this year's depressed tax receipts. That still assumes a very rapid economic recovery.

But in the shell game known as government budgeting, all that matters is that the figures appear to balance the books for the moment.

Once the General Assembly makes its cuts and passes a "balanced" budget, the state has met its constitutional obligation to ensure that income matches expenses.

Much like Scarlett O'Hara, state legislators -- and the governor -- believe in putting off till tomorrow what they'd rather not face today.

Barry Rascovar is deputy editor of The Sun's editorial pages. His column on Maryland politics appears here each Sunday.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.