Lawmakers unsure how to balance $12.6 billion plan.


January 30, 1992|By John W. Frece and Thomas W. Waldron


It was a day Gov. William Donald Schaefer said he has dreaded for two years -- a day in which he unveiled a "doomsday budget" that he said would "tear state government apart" unless the General Assembly raises taxes or cuts back on spending mandated by law.

Legislative leaders have said they're unlikely to let the "doomsday budget," which must be balanced by constitutional mandate, become law. But senators and delegates are still short of an agreement on what to do instead.

There is broad agreement that $200 million or more in "mandated" spending increases will be cut. But no one knows whether lawmakers will raise anywhere near the $541 million in new taxes Mr. Schaefer says he needs to fend off the worst of the "doomsday" cuts.

Some lawmakers, including most of the legislature's Republican minority, are insisting the state can get by on what it has for another year without raising any taxes.

The "doomsday" alternative painted by Mr. Schaefer at a State House budget briefing today was bleak:

*Five state agencies -- Natural Resources, Economic and Employment Development, Agriculture, Housing and Community Development, and Environment -- would be stripped of state funds and forced to rely on federal funds and money from fees, licenses and permits.

"These agencies will all but shut down and their services to the public will stop," Mr. Schaefer said. "Parks will close. There'll be no gypsy moth or mosquito spraying, no tourism program."

*Grants under the state's largest welfare program, Aid for Families with Dependent Children, would remain at already reduced Fiscal Year 1989 levels. A family of three, for example, would continue to get $377 a month -- instead of the $406 Mr. Schaefer would propose if he has more revenue.

*The General Public Assistance program for 27,000 disabled, destitute adults would simply be abolished.

*Medicaid programs for the poor that pay for prescription drugs, dental and vision care, kidney dialysis and basic personal needs would be eliminated. These are not required by federal law.

*The School for the Deaf and the Montebello Rehabilitation Center would be closed.

*State subsidies for local fire and rescue squads, Baltimore City police foot patrols, drug enforcement in Prince George's County, rape crisis centers, assistance for the elderly, drug and cancer treatment programs and local health offices all would be slashed.

The governor said all of this could be averted if the legislature were to adopt his proposed solution:

*Expanding the sales tax to cover dry clearning, automobile repairs and a variety of other currently untaxed services

*Raising the corporate tax rate half a percent.

*Assessing about $45 million in higher "user fees" for an array of government services.

*Doubling the tax on alcoholic beverages, and adding 25 cents to the tax on a pack of cigarettes.

*Changing the law requring the state to spend money on a variety of aid programs to local government.

"This is the one I hope will not be a reality," the governor said of his "doomsday" plan. "Do I think this will happen? We'll see."

His budget secretary, Charles L. Benton Jr., was a bit more optimistic: "I think what we'll end up with is something in between what the governor proposed and 'doomsday.' "

Most legislators have not yet seen the governor's new $12.6 billion spending plan for the fiscal year that begins July 1, although a handful of House and Senate leaders were briefed on it this morning.

"On the downside, it's a disaster," said Sen. Laurence Levitan, D-Montgomery, chairman of the Budget and Taxation Committee.

But Mr. Levitan complained that neither the budget itself nor most of the negotiations between the executive and legislative branches are focusing on Maryland's most immediate fiscal problem, a $225 million deficit in the current fiscal year that has not been closed.

"We're really not addressing '92," he said. "We're not focusing on it, which I think will lead us to losing our triple-A bond rating."

Del. James C. Rosapepe, D-Prince George's, a member of the tax-writing Ways and Means Committee, said Mr. Schaefer's spending proposal was far more favorable to education than a no-tax Republican alternative.

The GOP plan, he said, "slashes public schools and public higher education."

Ways and Means Chairman Tyras S. Athey, D-Anne Arundel, said lawmakers may not like the budget, but at least "it gives us a direction again," particularly in focusing attention on mandated expenditures.

Even if legislators act to avoid the governor's "doomsday" option, plenty of state programs -- and state employees -- will be affected by the recession-driven drop in tax revenue and the constraints that go with it. The governor's "solution" budget still calls for these actions:

*For the second year in a row, state employees will be denied any pay raise or automatic incremental increases. That will save $100 million.

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