Maryland among states with harshest cuts for poor Study predicts trend will continue

December 19, 1991|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau of The Sun

WASHINGTON -- Maryland is among seven states that, along with the District of Columbia, have imposed the nation's harshest cuts in cash assistance and benefit programs for the poor during this recession, according to a national study released yesterday.

"The direction state tax and budgetary policy has taken this year is ironic in view of the fact that the national administration has the goal of moving toward a kinder, gentler nation," said Steven D. Gold, director of the Center for the Study of the States and co-author of the report. "More appropriately, you could say we are moving toward a meaner, harsher nation."

"We could be entering a period where states compete among themselves to make themselves unattractive for poor people to live in," Mr. Gold said.

The report -- "The States and the Poor: How Budget Decisions in 1991 Affected Low Income People" -- listed Maryland with Michigan, Massachusetts, California, Ohio, Illinois, Maine and the District of Columbia as hitting the poor hardest.

"These states simultaneously cut several basic programs for the poor and materially weakened the safety net," said the report.

Helen Szablya of the Maryland Department of Human Resources said the charge against Maryland was hardly "fair" because it ignored previous increases in social outlays that could not be maintained during a recession, such as a 285 percent funding increase for homeless services during Gov. William Donald Schaefer's first four years in office.

"OK, so we have cut," she said. "But we have cut what we perhaps should not have increased."

Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities and co-author of the report, said Maryland's cutbacks -- some still only proposals -- were similar to moves already "wreaking havoc" in Michigan, which has terminated cash assistance for 82,000 needy, making many of them homeless.

"Given the state budget crunch, difficult decisions were inevitable, but the outcome was not pre-ordained," said Mr. Greenstein, noting that some states introduced progressive deficit reduction measures, which affected the rich more than the poor. The report said:

* Forty states, including Maryland, cut or froze benefits in the Aid to Families with Dependent Children program in 1991, the largest benefit reduction for at least a decade.

* Fourteen states, including Maryland, cut their general cash assistance programs -- the aid of last resort for the non-elderly poor -- and 13 states froze them, leaving a half-million people, or one-third of all recipients, even poorer.

* Twelve states, including Maryland, cut low-income housing programs, and 11 states cut special needs or emergency payments designed to help reduce homelessness. Governor Schaefer last month proposed elimination of Maryland's state-funded emergency assistance program.

* Eight states, including Maryland, cut general assistance medical programs.

* Maryland derived more revenue from regressive tax increases by expanding its sales tax base to include take-out food than through a progressive change in its capital gains tax.

Marvin Bond of the state controller's office disputed that a sales tax that excluded groceries and medical supplies was regressive and said the yield of taxing all capital gains would not be known until tax returns were filed.

"In general, the policy choices in 1991 hit poor people hard," said the report.

"State safety net programs took a beating."

It predicted the "harsh policies" would continue through fiscal 1993. Governor Schaefer has warned that Maryland could face another round of budget cuts as soon as spring if a depressed Christmas shopping season keeps sales tax revenues down.

Mr. Schaefer's press spokeswoman, Page Boinest, said: "There have been reductions made in all areas of government, and the governor will tell you he has tried to help the homeless and the vulnerable people, but in balancing the budget six times it was impossible to avoid making reductions in social programs."

Mr. Gold, whose Center for the Study of the States is a unit of the Nelson A. Rockefeller Institute of Government at the State University of New York, Albany, argued that cash assistance programs for the poor represented a sufficiently small percentage of average state budget -- 5 percent -- to be excluded from deficit-reduction efforts.

The report suggested these ways "to shield" the poor: progressive income tax increases; low-income relief from any regressive taxation; introduction or enlargement of state earned income credits and sales tax credits; and exclusion of basic benefit programs from any across-the-board cuts.

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