No 'engines of growth'

September 28, 1992

The word from Annapolis gets more and more depressing. Last week's bad news was a reaffirmation of the bleak revenue outlook for the state -- not only for the current fiscal year, but for the next two or three years beyond that. Economic recovery may not be a reality in the state until 1995.

"There are no clear 'engines of growth' for Maryland's economy in the 1990s," said Deputy State Treasurer H. Louis Stettler III. All indicators point to a continued stagnation for the coming years. In fact, Dr. Stettler said the loss of jobs in recent years won't be reversed until the middle of the decade. "We see no major improvement in employment in the near term."

Defense cutbacks are having a big, negative impact on Maryland. Corporate contractions are leaving see-through office buildings without any tenants on the horizon, and construction firms with little work to bid on. Big corporate losses of recent years will mean far lower tax payments from these concerns. Fewer working Marylanders will mean far less money from the income tax -- a loss of a quarter-billion dollars. The fallout in consumer purchases will mean a drop in sales tax receipts of $84 million. Even money spent on the lottery is down sharply, cutting state profits by $25 million.

And yet the state's expenses are growing. Medicaid recipients have risen 112,000 since 1990; welfare recipients are up 46,000; the prison inmate population is up 4,500; public school population is up 55,000. Even with the $450 million in cuts outlined last week by Gov. William Donald Schaefer, rising demand for government services makes it difficult to get the books in balance.

These depressing revenue estimates underline the importance of truly downsizing state government. We are no longer able to underwrite state programs that many have come to depend upon. State colleges may have to be closed. State hospitals may have to be privatized. Entire departments may have to be merged. User fees may be imposed on virtually any government service. And the state will have to give its citizens far less assistance in a wide variety of service areas.

With the legislature opposing any rise in taxes, the choice is clear: big cuts must be made in spending. But so far, we have yet to hear legislators embrace specific programs they want to send to the guillotine. Until lawmakers have the courage to make painful choices, the downsizing of state government will remain a political illusion, and the deficit will continue to re-surface -- and grow.

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