Bleak budget choices loom for Assembly Schaefer to offer more spending cuts, option of new taxes

January 03, 1992|By C. Fraser Smith | C. Fraser Smith,Sun Staff Correspondent John W. Frece of The Sun's metropolitan staff contributed to this report.

COLLEGE PARK -- As if one dismal spending plan were not enough, Gov. William Donald Schaefer will provide two of them in a single bill -- and include $700 million in new taxes as an option -- when he submits his budget during the legislative session that begins next week.

One of the two proposals will ask for $500 million in reductions from current spending levels. The Schaefer administration is on record as believing more cuts than these are unacceptable.

But the second proposal in the governor's message will set forth an additional $700 million in cuts -- reductions that could be prevented if there were an infusion of new revenues. The two proposals together cover all of the currently estimated $1.2 billion revenue gap.

The billion-plus total is needed to balance what the state calls its "baseline" budget for the 1993 fiscal year, which begins July 1. A baseline budget is what the state thinks it will need to cover spending at current levels, plus inflationary increases. And it now means a sum already lowered by $1 billion in six previous budget-cutting rounds during the last 15 months.

Frederick W. Puddester, the administration's deputy budget secretary, said yesterday that Mr. Schaefer's message to the legislature would contain this ultimatum: "Absent additional revenues or relaxation of statutory mandates [spending required state law], the following appropriations will be reduced or eliminated."

Mr. Puddester did not identify the threatened appropriations.

Unless the General Assembly agrees to raise taxes or reduce mandates, more state programs and employees will have to be dropped.

Mr. Puddester predicted that the targeted projects would be referred to as hostages. The General Assembly, in other words, will be in the position of "buying back" the programs it wants to save by either raising taxes or cutting such mandated programs as APEX, the public school aid program that requires an infusion of $173 million this year.

Mr. Puddester offered his comments yesterday during a seminar on Prince George's County finances held at the University of Maryland's Adult Education Center.

While he did not disclose further details of the governor's budget proposal, he did offer some of the broad themes that would characterize it.

The first, he said, is "individual responsibility."

Observing that 90,000 more Marylanders are receiving Medicaid than 18 months ago, Mr. Puddester noted that the state has begun to require more careful attention to preventive-health measures as a condition for receiving the assistance. Welfare recipients, he said, citing another example, could lose portions of their grant unless the children in a family attend school.

For some professions, the state may seek higher licensing fees, particularly where current fees do not cover the cost of regulation. Mr. Puddester mentioned doctors, nurses and real estate agents.

The state also will look even more aggressively for ways to save money by "privatizing" functions currently handled by government.

Finally, he said, additional positions and more programs will be eliminated.

The state's continuing financial problems, according to Mr. Puddester, are rooted not only in the deep and lingering recession, but in the continuing shift in Maryland from higher-paying manufacturing jobs to lower-wage service employment. That shift means lower income and sales tax revenue.

At the same time, the state's demographic profile is increasingly one of need. Of the groups demanding state services, he said, the two fastest growing are those Marylanders under 17 years of age or over 65.

After the presentation, Prince George's County Executive Parris N. Glendening said he was still waiting for Annapolis to provide clear leadership on budget problems.

Until the legislature and the governor, working with local officials, make decisions that account for the needs at all levels of government, he said, counties will be unable to solve their problems.

While state government seems unable to make such decisions, he and the County Council have enacted $40 million worth of new taxes, Mr. Glendening said. At the same time, the state has cut $48 million in local aid anticipated by the county.

3' "We are sliding backward," he said.

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