Plan to end deficit empties state funds for parkland, crises

May 22, 1991|By John W. Frece | John W. Frece,Annapolis Bureau of The Sun

ANNAPOLIS -- The weather had better not get much worse because state officials wiped out the final $27 million remaining in Maryland's "Rainy Day Fund" yesterday, hoping to provide shelter from the latest, $109 million budget deficit.

Gov. William Donald Schaefer and General Assembly leaders also made sure the sun is not going to shine on special economic development projects for awhile, deciding to siphon off the final million dollars left in the governor's coveted "Sunny Day Fund."

Even money from the sale of state-controlled savings and loan assets that was to have gone into a new "Stormy Day Fund" as a hedge against some catastrophic hurricane or other natural disaster was grabbed as the fiscal leaders agreed on a fourth -- and what they hope will be the final -- round of budget cuts for the current budget year.

The biggest hit was taken by the state's parkland acquisition program, where the final $30 million left from previous rounds of budget cuts was claimed. Fourteen million of that amount is money that would have gone to reimburse local governments for parkland already acquired with local money.

"Four times is very hard in one year," said state Treasurer Lucille Maurer. "The cupboards are bare. Not a crumb is left on any shelf."

The latest plan, developed quickly and with an unusual degree of cooperation between the governor and legislative leaders, actually calls for $125 million in spending cuts or fund transfers. The additional amount above the projected $109 million deficit is to provide what Mr. Schaefer called "a safety net" in case the deficit numbers get worse before the fiscal year ends June 30.

About $78.5 million of the budget balancing plan requires General Assembly approval. Mr. Schaefer and House and Senate leaders announced that a public hearing on the plan would be held June 18 in Annapolis, followed by a one-day special legislative session June 26.

This latest deficit, announced last week, was caused largely by a continuing drop in individual income tax and sales tax receipts -- indicators that the recovery from the national recession has not yet begun.

To hit the $125 million target, state officials also proposed:

* Trimming $5 million from the $15.9 million balance in the state's self-insurance fund, a fund used to pay for auto accidents or similar claims against the state. The remaining $10.9 million balance is more than double the yearly claims the state has had in recent years, Mrs. Maurer said.

* Requiring the state's colleges and universities to return to the state $3.2 million that, under normal circumstances, they would have been permitted to roll into the next budget year.

* Transferring $3 million from the state's Waterway Improvement Fund, half of which was to be used to design waterway projects.

* Saving $3.5 million by leasing rather than purchasing a new computer for the state's Baltimore Data Center, plus another $3.5 million because the Data Center did not begin operations as early as expected.

"This is not fat we are cutting out of the budget," insisted House Speaker R. Clayton Mitchell Jr., D-Kent.

When fiscal year 1991 began, the state had $127 million in its emergency "Rainy Day Fund" and at least $4.2 million in the lTC "Sunny Day Fund." Since then, the governor and legislators have had to raise taxes, cut spending and transfer funds from other sources to cover deficits that have totaled -- when the latest shortfall is included -- more than $660 million, according to Charles L. Benton Jr., secretary of budget and fiscal planning.

The new budget year that begins July 1 already faces a separate deficit projected to be $150 million.

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