Maryland called only waist deep in red-ink river Other states along Atlantic doing far worse

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

ANNAPOLIS -- Maryland's budget problems, severe as they may be, are no worse than those experienced in many other states and not nearly as bad as they have been in a handful of states.

"My view would be that Maryland's problems are in the mid-range with respect to other states," said Brian M. Roherty, executive director of the National Association of State Budget Officers in Washington.

"Clearly, as you move up the Atlantic Coast, the problems are much more substantial than in Maryland," Mr. Roherty said.

In Connecticut, for example, the state had to sell bonds to retire over the next five years a $1 billion deficit, and Gov. Lowell P. Weicker Jr. had to persuade the Legislature to impose the state's first income tax to put government finances on a more dependable footing.

But Connecticut also cut services, abolished 1,000 positions (including about 400 that were filled), and just this week threatened to lay off 3,500 workers if employee unions refuse to accept $346 million in wage concessions.

In New York, where the $6.5 billion deficit (in a $29.1 billion budget) equals about half of Maryland's over all $11.5 billion budget, taxes on alcohol and tobacco were raised and a variety of other surcharges and fees were instituted or increased to raise about $1 billion.

The rest of the deficit was covered by sending pink slips to some 4,000 state workers and by eliminating several thousand other jobs through attrition, said Chuck Porcari, a spokesman for Gov. Mario Cuomo. State aid to schools also was cut by 5 percent, executive departments were reduced by 10 percent across the board, and aid to local jurisdictions was slashed.

In lieu of a proposed 10-day furlough, Albany ordered all state workers onto what is called a "lag payroll plan" under which they must work five-day weeks for four days' pay for 10 weeks during the year. The lost pay would be returned to the workers whenever they leave state service.

Despite those actions, New York's money problems persist. The state currently is negotiating with various public employee unions asking for additional benefit concessions in their next contracts, Mr. Porcari said.

By comparison, Gov. William Donald Schaefer faced a $450 million deficit in Maryland's current budget. Last week, he proposed to eliminate it by firing 1,766 employees, holding another 900 jobs vacant and cutting deeply into a broad array of programs.

They included welfare and medical care for the poor, medevac helicopter service, drug addiction treatment centers, halfway houses, rape crisis centers, state parks, overseas economic development missions, colleges and universities, and aid to local governments.

But Mr. Schaefer was quick to point out that Maryland's budget problems also are far from over. Sales tax revenue for the first two months of the new fiscal year is already down $13 million, and he faces an expected $600 million to $800 million deficit in the budget he will submit to the legislature in January.

The basic problem

The basic problem affecting Maryland and other states is the national recession and the weak recovery, Mr. Roherty said.

But he added that the effects vary from state to state depending on the mix of industries.

A state like Michigan, he said, is hurt because it is so dependent on one industry, automobiles, and because its export trade is so dependent on the global economy.

"If you move out into the Midwest, things are pretty stable. As you proceed west, they're better, but they're beginning to feel the effects. There's more and more talk about [cuts in federal] defense spending, and I think people on the West Coast continue to be concerned about that," he said.

Like Maryland, almost all states have a balanced budget requirement in their constitutions, Mr. Roherty said.

While furloughs, layoffs, and shutting down government programs have captured the headlines, a newsletter from the budget officers' organization says that the most common state approach has been to eliminate unfilled positions, tap into reserve funds "and other one-time measures that provided short-term solutions to an immediate problem."

Maryland was among those states that took those kinds of actions during four rounds of cuts during the past year, including wiping out the state's $129 million "rainy day fund."

Recovery lags

But officials here and in other states were relying on national economic forecasts that predicted a recovery that has been delayed quarter by quarter from the first of 1991, to summer, to fall, and now into 1992.

"The hard decisions governors recommended turned out, in many cases, to be insufficient to restore balance to deteriorating fiscal conditions," to National Association of State Budget Officers said in its September newsletter.

Two years ago, for example, tax revenues in North Carolina fell by $500 million.

The following year, they dropped by $700 million.

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