Day of reckoning

August 27, 1991

Struggling to resolve Maryland's growing fiscal problems, state lawmakers are beginning to say what most were loath to admit before last November's election -- that taxes will have to be increased. Soon.

The state is facing a $300 million deficit, expected to grow to $700 million by 1993. Sen. Laurence Levitan, one of the General Assembly's most respected fiscal leaders, admitted last week at the Maryland Association of Counties that a 1 percent sales tax increase is virtually inevitable. But even that won't be enough to close the deficit gap. Levitan and others -- including Governor Schaefer -- now seem resigned to a special session of the legislature to come up with ways to put more money into the state's coffers. The likelihood is that there will be some kind of income tax increase as well as a gas and sales tax hike.

That's a grim outlook but there may be no viable alternatives. Several legislative committees have concluded that there simply is no more fat to be cut from the budget. Significant savings at the state level can come now only through reduction of money to local governments, tax increases or both.

For his part, Schaefer has never wavered in his insistence that Maryland needs new tax money. The governor in fact proposed a package of tax modifications and increases last session to bring in an additional $800 million a year. But lawmakers, fresh from a re-election battle that focused on government spending, rejected it, insisting they could nickel-and-dime the state into solvency. Now the money, and the rhetoric, have run out.

Most legislators now recognize that new taxes need to be in place by Jan. 1 to give the state six months before the fiscal year ends to collect revenues at the higher rates. The Linowes Commission tax package, which they rejected only months ago, seems about as equitable a framework as the state can fashion.

The growing state deficit puts the lie, once and for all, to the Reagan-inspired notion that government can provide more and better services without taxing people to pay for them. Governor Schaefer put it most succinctly when he told local leaders at the MACO conference, "the day of reckoning is here."

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