State's budget periled again Revenue experts are expecting $ 109 million shortfall

May 15, 1991|By William Thompson | William Thompson,Evening Sun Staff

Just when they thought the state's money woes ha bottomed out, Maryland lawmakers got the grim message that a new $109 million shortfall in projected revenues is threatening the current state budget.

And the big question today -- and most certainly for the next few weeks -- is simple: What are they going to do about it?

So far, answers are few and only lead to more questions. More agency budget cuts and transfers? Layoffs or furloughs of state workers? Emergency taxes? How will the money decisions affect next year's budget?

The latest revenue projection, which brings the total shortfall of the current fiscal year to about $660 million in a $11.6 billion budget, prompted Gov. William Donald Schaefer to call upon both his and the legislature's budget staffs to begin emergency meetings to come up solutions.

"This is very disturbing news," Charles L. Benton Jr., the governor's chief fiscal expert, said at a hastily called news conference yesterday in Annapolis.

"Obviously, this is a very painful time for all branches of state government," said state Treasurer Lucille Maurer.

Benton said the state would immediately suspend purchases of supplies "from pencils to fuel oil, postage stamps and paper" and would put off buying equipment, at least until the new fiscal year begins July 1.

Comptroller Louis L. Goldstein said the projected shortfall is directly linked to the recession, which has brought 6 percent unemployment to the state, slowed new home and highway construction and dampened consumer spending.

"We've never seen anything like this in the history of the sales tax," said Goldstein. "It's the most unusual thing that I could anticipate."

Goldstein said that the now-erroneous revenue projections released by the state in February were based on assumptions that the end of the Persian Gulf war would hasten economic recovery.

"Everybody agreed that the revenue estimates were sound," he said. "A lot of people thought they were too low. We raised them. Estimated revenue is no exact science."

In retrospect, Goldstein continued, economists were wrong in predicting when the economy would rebound.

"We don't have to apologize to anyone for our figures," he said. "We did the best we could."

Word spread quickly in Annapolis that the legislature, which ended its regular 90-day session last month, could be called back to the State House for a special session to approve whatever remedies are found to balance the 1991 budget before the books are closed June 30.

After meeting in the Governor's Mansion with legislative leaders and his fiscal staff, Schaefer said the state's latest dark economic cloud could have a silver lining.

"This is a good opportunity for the executive branch and the legislative branch to work together on this serious problem," he said, referring to the sometimes less-than-cooperative relationship between the two.

Schaefer said he had no quick solutions to balancing the budget and awaits recommendations from the fiscal experts.

"It's not going to be easy," he said. It's extremely difficult. But it can be done."

With more than $550 million in funds already either trimmed from the budget itself or shifted from special contingency accounts to keep the FY 1991 books balanced, it will difficult to adjust a tight budget by another $109 million, said Del. Charles J. Ryan, D-Prince George's, chairman of the House Appropriations Committee.

Ryan said lawmakers could look for relief by taking funds from economic development and capital building budgets as well as from the state's special "rainy day" and "sunny day" funds.

"The question is whether by doing all that you can add up to $109 million," he said. "I don't know the answer. I don't really think so."

Other options include "rolling over" or passing state agency debts from the current to the next fiscal year. This juggling tactic has been used on a relatively small scale in the past, but independent bond-rating houses that evaluate a state's fiscal heath frown on the practice.

Taxes could be raised, but they would not go into effect until the next fiscal year. The new revenues would have to be targeted to balancing the 1991 budget. But the General Assembly traditionally has been reluctant to approve targeted taxes.

Lawmakers and budget experts generally agreed that laying off state workers to save money is not feasible

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