Shortfall Solutions Can't Wait

AS I SEE IT

Legislators Must Act At June 28 Session

June 16, 1991|By Sharon Hornberger

So, you thought that you could breathe a sigh of relief . . . the General Assembly had adjourned and your pocketbook was safe for anotheryear.

Now you learn all is not well, your pocketbook is not safe . . . the General Assembly is reconvening for a special session June 26. The issue to be discussed is how to solve the major budget deficits facing Maryland. What else is new? And why didn't the members act during the regular 90-day session?

A one-day special session will cost the taxpayers $8,000 to $10,000. But when you are talking millions of dollars in deficits, what's a few more thousand?

When the General Assembly adjourned April 8, Maryland was facing not one but two budget deficits: $553 million forfiscal 1991 and $192 million for fiscal 1992, and there had not beenone major revenue-producing measure passed to address these deficits.

Now, the state faces still more red ink. Something must be done and done fast.

The impact of the continuing recession has translated into an additional state shortfall of approximately $109 million for this fiscal year, which ends June 30, say documents distributed bythe Department of Fiscal Services. An additional shortfall of $150 million is possible for fiscal 1992.

Most of the new deficit has been caused by a further decline in income and sales tax revenues.

The governor recently acted by freezing all state purchases through this fiscal year. This will cut about $20 million from the deficit. Layoffs also have been discussed, but they have not taken place.

Withonly weeks left in the fiscal year, freezes and layoffs cannot raisethe money needed to balance this year's budget.

It is time for the members of the General Assembly to take a hard look at the facts and act during the special session.

Delegate Richard C. Matthews, R-5th, chairman of the Carroll County delegation, recently told me, "The downside of a special session is that the subject is not confined to just balancing the budget for fiscal year '91. Tax increases for the future years may be voted on as well. I assure you that I will voteagainst an increase.

"I don't think that the legislature has cut all of the waste and inefficiency from the budget." he said. "I am not a member of the Budget Committee, but I don't think that there is enough legislative oversight on departmental spending. The committee, as an example, has no handle on the transportation issues, and the delay in the Hampstead bypass is a perfect example.

"The suggestion was made to me to further the question with the Transportation Department at the annual meeting held in each county by DOT. The time to question spending by a department is during the budget approval process, not after."

Since one solution proposed by legislative leaders to reduce the budget deficit was to delete all remaining funds from existing projects and return them to the General Fund, I spoke with Delegate Richard N. Dixon, D-5th, a member of the Appropriations Committee.

"The members of the General Assembly should go down to Annapolis, empty the remaining funds from all accounts and come home," Dixonsaid. "There must be a limit to the subjects discussed. A special session is called for a specific purpose, in this case to balance this year's budget. Let's save the taxpayers' money and only address that purpose."

The "remaining funds" that Dixon is referring to includesome $27 million remaining in the "rainy day fund," the state's emergency account; some $30 million from the parkland acquisition fund; $5 million from the self-insurance fund; and $3.5 million from the Waterway Improvement Fund.

Can these programs be considered fat in the budget? They represent previously designated dollars for programs vital to the well-being of the state and her citizens. More importantly, the "rainy day fund" contains the dollars considered by bonding houses when determining our state's bond rating.

How do these cuts affect bond ratings?

"The bonding houses are more concerned that the state has a plan in place to address these deficits, and we are implementing the plan that was presented to them during the hearings in this last legislative session," Dixon said. "That plan will satisfy the bond houses."

Perhaps the bond houses will be satisfied with the plan presented this year. But what will happen next year? It appears that the state still will be facing major deficits and the legislature will have depleted all funds now held in reserve.

Maryland is one of only 10 states with a AAA bond rating.

During the 1991 session, members of the General Assembly -- much aware of their constituents' demands that no new taxes or tax increases be enacted -- refusedto approve any major tax increases. However, the state continues to be faced with falling revenues, high unemployment and increasing expenses for goods and services.

After the special session there may be no more funds to transfer.

As Dixon said, "The members of the legislature had seen state revenues increase by several million dollarsevery year for the last several years, and now that the revenues have declined, this was a shock. People need time to react to such a shock."

Are we willing to accept a tax increase to make up for these budget deficits, or are we willing to do without some state services to make up for the budget deficits?

As the old proverb goes, you can't have your cake and eat it, too.

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