Schaefer OKs second look at budget cuts Legislative leaders to offer alternatives by Wednesday

October 06, 1991|By John W. Frece | John W. Frece,Annapolis Bureau of The Sun

ANNAPOLIS MNB — ANNAPOLIS -- Gov. William Donald Schaefer agreed yesterday to give General Assembly leaders until Wednesday to re-examine his $450 million deficit-reduction plan to see if they can come up with more acceptable alternatives to some of the most damaging budget cuts.

Although legislators said they were encouraged by Mr. Schaefer's willingness to cooperate, they conceded that any changes in the plan would shift the pain from one area of government services to another, or require higher taxes -- or both.

During a private, hourlong meeting in Mr. Schaefer's State House office, lawmakers said they protested his plan to eliminate subsistence welfare allowances and medical care for some 24,000 General Public Assistance recipients, to close two state police barracks and fire 83 troopers, to ground two medevac helicopters and curtail emergency response services, and to reduce or eliminate a variety of treatment and counseling programs.

They said they were given time to draw up a list of alternatives to the cuts, which could include:

* Legislation that would give Mr. Schaefer the flexibility to cut certain mandated programs. Examples are state aid for public schools, local transportation aid, and Social Security and pension costs for local teachers fully paid by the state -- all rendered untouchable by law.

* A change in the law that would give the governor the opportunity to reduce, postpone or eliminate a legally required $187 million increase in state aid for education (so-called "APEX" funds) that now must be included in the fiscal year 1993 budget he will introduce in January.

* Some form of furlough program for state employees, or possibly other layoffs in other unspecified areas of government.

One alternative obviously on the table is a tax increase, but it was the one issue on which Senate and House leaders seemed farthest apart, participants in yesterday's meeting acknowledged.

Senators, such as Budget and Taxation Committee Chairman Laurence Levitan, D-Montgomery, continued to call for an immediate sales tax increase to help overcome the state's short-term plunge in revenue.

Others, such as Senate Minority Leader John A. Cade, R-Anne Arundel, said they believed a combination of deep cuts and a tax increase is the only solution to a financial problem that cumulatively could exceed $1.2 billion.

But House leaders, led by Speaker R. Clayton Mitchell Jr., D-Kent, counseled a slower approach to the tax question, saying that taxes should be addressed in a more reasoned, comprehensive way during the regular General Assembly session this winter.

One delegate offered a more realistic political explanation for delay: "There is some question whether the votes are there [to pass a tax increase] on the Senate floor. And, unquestionably, the votes aren't there on the House floor."

Even Mr. Levitan agreed: "If you took a vote today, there wouldn't be any new taxes."

Mr. Schaefer has been frustrated because, out of an $11.5 billion budget, he has the discretion to cut only from certain programs -- totaling about $4.5 billion. The rest is protected by various federal and state mandates. Legally mandated local aid alone, including school aid, amounts to about $2.1 billion, money the governor was unable to consider in developing his deficit-reduction plan.

Roughly a dozen legislators attended yesterday's meeting, which was arranged at the request of House Speaker Mitchell.

Senators and delegates alike praised the tone of the meeting, saying they were hopeful it not only would result in a more acceptable solution to the current problem but would lay the groundwork for a continuing legislative and executive dialogue on fiscal problems.

Even before Mr. Schaefer unveiled his $450 million in cuts last week, he was informed that sales tax revenues had continued to drop by an additional $13 million. On top of that, he already faces in the next budget (for fiscal year 1993) a deficit estimated in the range of $600 million to $800 million.

As he left the State House yesterday, Mr. Schaefer said, "It was a fine, good meeting," but he declined to elaborate.

Various lawmakers described the governor as "subdued" and "restrained" but said he made clear he was willing to consider any reasonable alternatives, including taxes. But he also warned them that if progress is not made by Wednesday, he may go ahead and sign the budget amendment necessary to implement the $450 million plan approved on a 2-1 vote of the Board of Public Works last Wednesday.

Legislative leaders immediately directed their budget advisers to work with the governor's to prepare a menu of options that House and Senate leaders could discuss at a meeting tentatively set for tomorrow evening.

"He's agreed to hold off," said House Appropriations Committee Chairman Charles J. Ryan Jr., D-Prince George's. "That was the objective of the meeting."

Legislators had anticipated that the stalemated issue of congressional redistricting would also come up at yesterday's meeting, but participants said it did not.

After the meeting, however, House Speaker Mitchell and Senate President Thomas V. Mike Miller Jr., D-Prince George's, did meet privately for about 30 minutes to discuss differences in rival congressional redistricting plans.

Mr. Mitchell said the House and Senate still remained at odds over which district would include 71,000 residents of Cecil County. He said he and Mr. Miller would resume negotiations tomorrow.

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