Schaefer's tab for '93 causes barely a ripple Assembly relishes input on budget of $12.6 billion

January 31, 1992|By John W. Frece | John W. Frece,SUN GRAPHICSAnnapolis Bureau of The Sun Thomas W. Waldron, Laura Lippman and Marina Sarris of The Sun's Annapolis Bureau contributed to this article.

ANNAPOLIS -- Here it was at last, the governor's long-awaited "either-or" budget. Either you raise taxes and cut spending or it will be "doomsday" for state government as Marylanders have come to know it.

But when Gov. William Donald Schaefer's $12.6 billion spending plan for the 1993 fiscal year finally landed yesterday, two weeks later than normal, it hardly caused a ripple.

Most legislators said it was about what they'd expected, and most seemed to take in stride the threat that $728 million in state programs could be imperiled if they collectively fail to act.

"I wouldn't call its arrival either a bombshell or a feather," said Del. Gene W. Counihan, D-Montgomery.

This is because most lawmakers realize this spending plan is different from any they have seen before: It's wide open to change.

By making so much of his budget contingent on legislative action, and by agreeing to work directly with legislative leaders on the state's fiscal problems, the governor has relinquished for this year much of his traditional power over spending priorities.

"It means we can act like a real legislature, and increase and decrease [spending] just like the other 49 legislatures," said Del. Timothy F. Maloney, D-Prince George's.

Maryland lawmakers have long been jealous of the strong

constitutional authority the governor has over a budgetary process that leaves them with few options other than reducing his budget lines.

But this year, Mr. Maloney said, "The legislature will be on equal footing with the governor to make or unmake priorities, more than we've done in the past or are likely to do in the future."

Mr. Schaefer said that continuing government services at current levels would cost $7.4 billion in the portion of the budget financed with general state taxes. But knowing that revenues have been in a free fall for nearly two years, he said, he trimmed $459 million in spending before introducing the plan.

The remaining $6.9 billion, he said, has been swelled by huge increases in welfare cases (up 32,000 in the last year), costly expansion of Medicaid health care for the poor (130,000 new cases) and an unrelenting surge in the prison population (up 3,800). The prison population is increasing at the rate of 100 inmates a month.

But state revenues, decimated by the recession, are expected to total only $6.2 billion during the budget year that begins July 1. To cover the shortage, Mr. Schaefer proposed -- as he promised -- to raise $543.7 million in new taxes and another $45.7 million in higher fees for government services. The new taxes would include an expansion of the sales tax base to include a variety of currently untaxed services, such as dry cleaning, data processing and auto repairs.

Also proposed: a doubling of the tax on liquor, beer and wine; a quarter-a-pack increase in the cigarette tax; an increase in the corporate income tax rate, from 7 percent to 7.5 percent; and a $200 minimum tax on all businesses (61 percent of Maryland business avoided paying any corporate tax last year).

The rest of the gap would be covered by cutting $192.8 million in legally mandated aid to Baltimore and the 23 counties. This includes state financing of school bus transportation and grants that keep property taxes down.

To offset those cuts, the governor would give local governments authority to raise "piggyback" income taxes from the current maximum of 50 percent to 60 percent of what the state takes in.

The governor's budget left untouched a scheduled $184.4 million increase in state aid for education known by the acronym APEX. But local school boards will surely feel the pinch as other general cuts in state aid to local governments are passed their way.

Higher taxes, higher fees and reductions in aid all require General Assembly approval. Because the governor is obligated by the state constitution to submit a balanced budget, Mr. Schaefer was forced to include a $728 million contingency list of programs that would be axed if he and the legislature were unable to pay for them. That is the doomsday list.

"Nobody is going to give any serious credence or discussion to that. That isn't even an option," said House Minority Leader Ellen R. Sauerbrey, R-Baltimore County, a comment echoed by many of her Democratic colleagues.

The Democratic-controlled leadership of the Assembly, in fact, has been working behind the scenes for weeks to fashion a compromise that would avoid such desperate cuts. But stubborn differences over whether taxes should be raised at all -- and if so, which ones and by how much -- have frustrated a consensus.

"I think what we'll end up with is something in between what the governor proposed and doomsday," suggested the governor's budget secretary, Charles L. Benton Jr.

But the Republicans have complicated the problem politically by proposing their own, tax-free budget, a measure many rank-and-file lawmakers would rather embrace because they think it's more in line with public attitudes.

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