Decision time nears on budget State legislators wrestling with budget gaps as new economic forecast is being released.

February 25, 1991|By William Thompson | William Thompson,Evening Sun Staff

When lawmakers find that time is short and money scarce, can taxes and employee layoffs be far behind?

Maryland legislators are wrestling with that tricky question even today, as decision-making deadlines draw near over how to close a new $88 million gap in the current state budget and another $115 million gap threatening the proposed budget for next year.

Although the latest bad budget news was to be announced officially today in Annapolis with the state Board of Revenue Estimates' release of its most current economic forecast, key lawmakers and members of the Schaefer administration spent much of the weekend trying to solve the money puzzle.

Unexpected increases in the cost of welfare programs and Medicaid -- the health insurance program for the poor -- have contributed to the problem. But most of the budget woes have been caused by a falloff in tax revenues resulting from the recession.

Lawmakers have good reason to work quickly. First, they must reassure a visiting team of New York City bond-rating analysts Thursday that the state's budget crisis is under control and that Maryland's coveted AAA bond rating should remain intact. A March sale of $95 million in state bonds could be less successful than hoped for if the state's rating slips.

Another reason that lawmakers are under pressure is because they got off to a late start in their review of the upcoming budget. Since the Schaefer administration had to recalculate the state's current budget several times to keep it balanced as required by law, the proposed 1992 budget failed to arrive on schedule. The six weeks usually set aside during the annual 90-day session by legislators to pore over the proposed budget were cut back to four. Fiscal committees in the House and the Senate have only recently begun to address Schaefer's proposed $11.6 billion budget for the upcoming year.

Expecting that they and the governor will iron out the latest budget wrinkles at least with a general agreement, lawmakers ++ say they have no reason to fear that the state's bond rating will suffer.

But that doesn't mean that the two sides are in accord over some crucial budget details. The governor is asking legislative approval to shift about $39 million from the state's emergency Rainy Day Fund to close a large portion of the latest budget gap. The $39 million would be in addition to $72 million the governor asked for from the same fund during previous budget-balancing moves.

House Speaker R. Clayton Mitchell Jr., D-Eastern Shore, said that, while lawmakers may be willing to approve the $72 million transfer, dipping deeper into the special fund could jeopardize the state's bond rating. Maryland's rating has remained relatively secure over the years, in part because bond houses were impressed with the state's ability to stay in the black without having to rely upon such contingency funds.

And then there are the questions about new taxes and layoffs.

Gov. William Donald Schaefer has insisted that neither alternative would help resolve the current budget problems because there are only four months remaining in the current fiscal year.

Schaefer said cutting jobs would be impractical for this budget year because it would mean laying off a "staggering" number of state workers.

However, House and Senate leaders have warned that layoffs could become a reality in dealing with the 1992 budget year because such a move would save the state substantial funds.

State budget experts said the state could save $17.5 million annually in salaries and paid benefits by laying off 500 workers.

In addition to the transfer of the Rainy Day Fund money, Schaefer's budget experts are proposing that the latest $88 million gap -- which brings the total 1991 budget shortage to more than a half-billion dollars -- be closed partly by reducing or delaying some state building projects and cutting back on parkland acquisition.

Schaefer also proposed taking $22 million for this year's budget from the transportation fund, usually reserved for highway, airport and mass transit projects.

Legislative leaders are considering two early suggestions for balancing the proposed 1992 state budget, one to cut $213 million in spending and another to raise taxes by an undetermined amount.

One plan under discussion would raise $74 million in the budget year that begins July 1 through taxes on telecommunications services and sales taxes on cigarettes and snack foods.

Although the plan has met opposition throughout the General Assembly, Schaefer is pressing for approval of an $800 million tax overhaul proposed by a gubernatorial commission.

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