New Budget Sinkhole

May 19, 1991

No sooner had the crisis atmosphere lifted from the State House in Annapolis than a new budget sinkhole appeared last week. Since then, both the governor and legislators have been scrambling to avoid a plunge down this latest fiscal chasm.

As hammer blows from the current economic recession continue to reverberate, state tax collections are in a free-fall. Even though fiscal experts have lowered revenue estimates three times since December -- and the legislature and governor have cut a whopping $550 million from the budget -- they discovered last week a new $109 million shortfall. Even worse, only six weeks remain before the state's account books must be closed -- and the revenue and expense figures balanced -- for this fiscal year.

Coming up with so much money in so few weeks could prove difficult. But Gov. William Donald Schaefer wasted no time in extending an olive branch to General Assembly leaders, asking them to work with him on this fiscal crisis. Lawmakers immediately agreed, raising prospects for a fiscal detente that could lead to an easing of hostilities between the two sides on a host of issues.

Cooperation is imperative. Not only do State House officials have to hurry to scrape together $109 million before the end of June, they now face the bleak prospect of another $150 million mountain of debt already projected for next year's budget. Even worse, that gap could grow dramatically if the region's recession does not show signs of bottoming out soon.

This situation calls for strong, decisive action to reduce the scope of non-essential government services. So far Mr. Schaefer and legislators have intentionally avoided closing programs or ordering wholesale layoffs. That may no longer be possible. The state's expenditures are far out of line with the state's income. Like any householder caught in a deficit situation, the first move has to be elimination of all but the most basic expenses.

Solving next year's budget crisis will require a concerted legislative effort to lower the fundamental costs of government. A second logical move is to enact comprehensive tax reform that not only produces added revenue but shifts more of the burden zTC the well-to-do and gives the middle class some relief. Simply hiking taxes on everyone won't work. A solid foundation must be laid for the state's financial well-being, a foundation that restores equity and progressivity to the tax structure.

We urge the governor and legislators to continue their joint budget efforts throughout the summer and fall. They should look beyond the immediate crisis and start taking a long-range view of Maryland's needs for the rest of this decade. That's the best way to avoid falling into this latest fiscal sinkhole -- while at the same time assuring Marylanders that the state can withstand financial shocks in the future.

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.