Assembly's leaders offer plan to cover $109 million deficit

May 18, 1991|By John W. Frece | John W. Frece,Annapolis Bureau of The Sun

ANNAPOLIS -- Legislative leaders presented Gov. William Donald Schaefer with a tentative plan yesterday to cover the latest $109 million state budget deficit, but they said putting the plan into effect might require a special legislative session late next month.

Details of the plan were not disclosed, but with only six weeks remaining in the fiscal year, the options were thought to be limited to several obvious targets.

Among the options were the approximately $26 million remaining in the state's emergency "Rainy Day Fund," an additional but undetermined amount from the state's local parkland acquisition program and $20 million or more that might be made available by canceling virtually all supply and equipment purchases for the remainder of the fiscal year.

Layoffs or similar personnel actions were not expected to be among the recommendations because they could not generate sufficient savings with so little time left in the budget year. Similarly, tax increases could not be enacted or implemented fast enough to help.

The spending reduction plan, developed by budget advisers to the governor, the legislature, the comptroller and the state treasurer, was presented to Mr. Schaefer in the late afternoon, and House Speaker R. Clayton Mitchell Jr., D-Kent, predicted the governor's reaction would be positive.

"The majority of the things on there he will probably agree to," Mr. Mitchell said.

The governor is expected to decide by early next week which parts of the plan he favors or opposes. Sources familiar with the "menu" of options said it could actually raise more than the $109 million needed, giving the governor the flexibility to chose among options or to cover a larger deficit if it continues to grow.

Mr. Mitchell said that even if all parties agreed to the plan next week, it might be held in abeyance until a special legislative nTC session could be scheduled just before the expiration of the fiscal year June 30. That would give state officials time to review the most current revenue figures to determine if their plan would cover the projected deficit.

Mr. Mitchell said he did not favor pushing a portion of the 1991 deficit into the upcoming fiscal year, which already faces a separate deficit of its own, estimated at $150 million.

"The fiscally prudent thing is that we not roll over anything," he said.

In announcing the latest in a series of deficits earlier this week, state officials blamed it primarily on a continuing decline in income and sales tax revenue, which they said was the result of a recession that might not have bottomed out.

State Comptroller Louis L. Goldstein said a particularly strong decline in construction industry activity had created a damaging ripple effect throughout the economy.

Partly in reaction to that, Senate President Thomas V. Mike Miller Jr., D-Prince George's, said yesterday the legislature might have to reconsider its decision of earlier this year to postpone an increase in the state's gasoline tax. Without the revenue that proposal would have raised, the state's highway construction program has slowed to a trickle. The infusion of new revenue from the state might help jump-start the economy, Mr. Miller said.

"I think it is a foregone conclusion that sometime in the near future . . . the legislature is going to have to address the question of a revenue enhancement to the Transportation Trust Fund," he said.

Mr. Mitchell, who was largely responsible for blocking the gas tax proposal during the most recent legislative session, said that even if legislators were interested in enacting a new gas tax proposal, he was uncertain if the Department of Transportation could lay out its long-term highway construction plans in time.

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