Schaefer's negotiating budget

January 31, 1992

"If you think you can find answers without pain, you're wrong," said Gov. William Donald Schaefer in presenting his two-pronged budget for the coming year to state legislators. No matter how lawmakers and the governor go about closing the state's $1.2 billion budget gap, people will be hurt.

Under one Schaefer scenario, the budget will be balanced by stripping state programs of a half-billion dollars, cutting local aid by $193 million, dramatically hiking fees, raising tobacco and liquor taxes and broadening the sales tax to include many services and items now enjoying exemptions.

Under the other scenario, dubbed the "doomsday budget," the entire $1.2 billion gap would be closed by hacking away at government programs -- there would be no state money spent on natural resources, agriculture, housing, economic development or the environment. And local aid would be cut a whopping quarter-billion dollars.

The governor, in brief, has thrown down the gauntlet to lawmakers. He has given them two options, and his aides hint broadly that they will be happy to work out a compromise that retains the best aspects of the two plans now on the table.

That is the most likely outcome. We doubt that many legislators want to go so far as to cut all college scholarship aid, close the School for the Deaf, end all funding for fire and rescue squads and eliminate entirely the state's aid program for the long-term disabled who don't qualify for welfare. At the same time, it is unlikely the majority of legislators can be persuaded to raise taxes and fees by more than a half-billion dollars.

But the governor now has given the General Assembly some concrete proposals. The negotiating can begin in earnest.

Maryland's budget plight is largely due to federal mandates and mandated spending increases approved in prior years by the General Assembly. With the addition of 130,000 people to the Medicaid rolls since the start of the recession, with the prison population still increasing at the rate of 100 per month and with huge new outlays due this year for local public schools, state government costs are soaring. Mandates and entitlements have added $750 million to the budget in just two years.

There has been no growth in state revenues during that period and, for the first time, sales tax revenues have actually declined. This has forced the governor to cut most state programs drastically for next year and seek additional taxes to put Maryland's budget back in balance. Both of these moves will prove unpopular. But until legislators come up with a better plan, the governor's balanced approach appears to be the better option for resolving Maryland's fiscal crisis.

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