Schaefer calls keno vital to balancing state budget Revenue forecast shows slight rise

December 11, 1992|By C. Fraser Smith and John W. Frece | C. Fraser Smith and John W. Frece,Staff Writers

Gov. William Donald Schaefer yesterday defended the state' controversial venture into keno gambling, calling it the only way to balance the budget at this time.

Mr. Schaefer spoke on the same day that estimates were released showing tax receipts in Maryland moving up slightly for the first time in two years. This should mean that no further budget cutting will be needed in this fiscal year, which ends June 30, state officials said. But the additional income will not be enough or come soon enough to offset the need for gambling revenue.

"We had to go to keno, which I don't particularly like," Mr. Schaefer said during his weekly radio program, "but there wasn't anyplace else to go."

Mr. Schaefer welcomed an impending investigation of the process by which the contract was awarded for the keno game. The U.S. attorney for Maryland, Richard D. Bennett, is expected to respond officially to a number of complaints about the procurement process.

Referring yesterday to the prospect of an inquiry, Mr. Schaefer said, "Mr. Bennett has never been involved in anything during the time that I was here, but now toward the end of the [Bush] administration he gets very active about this. . . . If he finds we used any devious means or anything that wasn't proper, I would like to know, too. We tried to make it a fair contract all the way


Mr. Bennett met yesterday in his office with Del. Leon G. Billings, a Montgomery County Democrat who has called for an investigation. Mr. Bennett has said that he would announce his plans today or tomorrow.

The governor, speaking on his weekly WBAL radio call-in show, said that he believes the keno controversy has been stirred by newspaper reporters and "non-informed editorial writers." He said suggestions that the contract was awarded without competitive bidding are incorrect. Under terms of the original contract with GTECH Corp. of Rhode Island -- which was competitively bid -- GTECH was given the authority to run a keno game if the state decided to have one. The Lottery Agency plans to offer keno Jan. 4.

To have reopened the bidding, the governor said, would have opened the state to a breach of contract suit. This aspect of the GTECH contract has been reported in various newspapers, but Mr. Schaefer said that he thought the history had been deliberately distorted: "The papers portray it the way they want it."

Yesterday, for the first time in two years, there was relatively good news in revenue projections: The state is holding its own.

"Stabilization is welcome," said Treasurer Lucille Maurer after the state's Board of Revenue Estimates gave its annual December estimate of tax revenues for the next 18 months.

The board consists of Mrs. Maurer, Comptroller Louis L. Goldstein and Charles L. Benton Jr., the governor's budget secretary.

For next year, the board predicted a modest increase in tax revenues of approximately $250 million.

Maryland's economy is growing at a rate of 1.6 percent this year but will grow faster next year. The board predicted a rate of 2.3 percent next year. In the boom years of the 1980s, Maryland came to expect growth rates of 8 percent or 9 percent.

What the revenue projection means, Mr. Benton said, is it is unlikely that there will be a need for a fourth round of budget cuts in the current fiscal year, ending June 30.

But he said the relatively modest increase projected for next year is barely enough to cover the increased cost of education and other spending programs that are mandated by law.

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