Economic doldrums here to stay, Schaefer warns He challenges public to accept reality

October 17, 1991|By C. Fraser Smith kBB

The people of Maryland need an economic wake-up call, Gov. William Donald Schaefer said yesterday.

"People just can't understand why a state like Maryland has a deficit of $1 billion," he said during a meeting of the Board of Public Works. Tuesday night, Mr. Schaefer sounded the same alarm at a convention of the Maryland Chamber of Commerce in Ocean City.

"We're used to the good times," he said, observing that Maryland is one of the six or seven wealthiest states in the union. The reality now is hard times, and they will be harder "if we don't wake up," he said.

Mr. Schaefer recites the deficit numbers: the $600 million cut last winter and spring, the $450 million cut last week and the $700 million that must be cut next year. He says $600,000 has been cut from his own budget. People have lost their jobs, and state aid to counties has been chopped. And still people don't get the message, he said.

"All I get is that I'm after a tax increase. I'm not. I really am not," said the governor, who has been accused of targeting budget cuts on high-profile agencies such as the state police and the medevac helicopter program to generate sympathy for a tax increase.

In Ocean City, Mr. Schaefer urged business leaders to counter what he called "bad editorials" and announced that he himself had resumed his practice of writing notes to citizens who are critical of him or of state government. To one critic, the governor wrote, "I hope you're recovering from your lobotomy."

Though he has often squabbled with legislators over a range of issues, Mr. Schaefer defended them before the business group.

"The legislature's got a tough time," he said. "Do not blame the legislature. Blame the people. The people said no taxes. Cut the fat. Cut bureaucracy. No new taxes. The legislature followed the will of the people."

The reality of and the reasons for Maryland's problems, the governor said, can be found in the stories of hard times at some of the nation's most profitable companies, such as IBM, Westinghouse and USAir -- all of which have had to lay off workers in recent weeks.

When the big companies announce nationwide layoffs, Mr. Schaefer observed, the shock waves sweep through their Maryland installations. And each retrenchment threatens a negative economic "trickle down" in which revenue streams ebb more than flow.

"You lose jobs. You lose sales tax revenue," he said. "People who had a [high] standard of living are no longer able to maintain it."

And the state, having reduced its spending five times for a total of more than $600 million, still cannot anticipate a stable environment for getting its house in order. Before the red ink could be soaked up by a $450 million budget reduction plan adopted last week, the state's tax collectors were reporting another $18 million in shortages -- $13 million for September and $5 million so far in October.

Asked for her thoughts about why people doubt the severity of the state's problems, State Treasurer Lucille Maurer, a member of the Board of Public Works, said, "People don't understand the depth of the cuts we have ordered. They think there's waste in government. The truth is that we've had five budget cuts in 11 or 12 months. We're beginning to cut basic services. But people think construction projects like the baseball stadium hurt," she said. Others point out that money to build stadiums comes from a lottery -- not from the choked-off sales and income taxes.

Another $700 million must be cut in the budget now under preparation for fiscal year 1992, which begins next July.

The governor did not ask for support for new taxes. But he said, "I live in a world of reality, and things are getting no better. No better. Heed my warning."

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