Easing Maryland's Budget Bind

November 08, 1991

In just over a year, state officials have cut Maryland's budget five times, lopping off a combined $1 billion. These sizable and frequent reductions have not been enough, though, to stem the flow of red ink. Sweeping steps to streamline services and overhaul the state's tax system are required if Maryland is to regain its fiscal footing.

Revenues are no longer capable of paying for all current programs. Maryland's shift from a manufacturing to a service economy has slowed tax receipts. A narrowly applied sales tax, a virtually flat-rate income tax and an underutilized corporate tax system have all contributed to this decline. Once the recession ends, fiscal analysts say the state's problems will persist. If anything, the gap between spending and income will widen.

Sadly, Gov. William Donald Schaefer and General Assembly leaders have disagreed more often than not on how to deal with this on-going crisis. Band-aid approaches have been common. Legislators, in particular, are so fearful of the reaction from special interests that they hesitate to endorse any steps that might provoke criticism.

Given the depth of Maryland's problem, determined action is essential. It ought to be taken in concert by Mr. Schaefer and legislative leaders. We suggest the following:

* The governor and legislators should set up a major fiscal conference soon to find some long-range answers to Maryland's problems. Its participants should develop a comprehensive package for the governor to submit as part of his next budget.

* Mr. Schaefer should ask J. Henry Butta, chairman of his Commission on Economy and Efficiency in Government, to present his group's initial recommendations at that December conference. The Butta commission is in the best position to suggest what programs ought to be downsized, merged, eliminated or privatized.

* The governor should ask R. Robert Linowes, who chaired his tax-reform commission, to prepare an updated report on how his panel's suggestions can be applied to the current budget crunch.

* Legislative leaders should outline the Assembly's list of options, based on their own just-concluded studies on state taxation and spending.

This would give the governor and legislators a solid base on which to make joint decisions. Then come the hard choices: Should government narrow its responsibilities and reduce programs and services? Should government turn over certain enterprises to the private sector? Should government revamp its tax system to make it more progressive and equitable?

Given the controversial steps required, the two sides must work together. Maryland faces continuing money woes -- perhaps another $200 million in red ink this fiscal year and $700 million more next year. Painful adjustments have to be made. This is the moment when citizens expect courageous leadership in Annapolis. It should begin with a fiscal conference as soon as one can be arranged.

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