Schaefer budget tries to squeeze itself into line Governor defends $12.7 billion plan already under fire

January 22, 1993|By John W. Frece and Marina Sarris | John W. Frece and Marina Sarris,Maryland Department of Budget and Fiscal Planning RISING STATE CASELOADS =1 Staff Writers

With prisons, schools, welfare and Medicaid continuing to eat up the bulk of state tax revenues, Gov. William Donald Schaefer has fashioned a 1994 budget that attempts to manufacture the money that the state's economy is too weak to produce on its own.

"We're not going to sit and watch the world go by," Mr. Schaefer said yesterday, as he defended his $12.7 billion operating budget for the fiscal year that begins July 1.

The plan has already come under fire from legislative leaders, who say they fear that the state may not be able to afford the proposed 4.5 percent increase in spending at a time when Maryland's economy is not expected to grow by more than 2 percent to 2.5 percent.

Mr. Schaefer has managed to support that level of spending by boosting revenues in other ways.

The budget depends heavily on $100 million that is expected to be collected from keno, the state's newest lottery game.

The governor also wants to use about $19 million intended for parkland purchases on other programs instead. And he found about $30 million more for his plan by increasing various fines and fees and tapping into funds intended for other purposes.

The problem, he and his budget advisers said, is that almost all of the normal increase in state tax revenue was consumed by legally required spending, including public schools and caseload-driven "entitlement" programs such as Medicaid and Aid for Families with Dependent Children.

In addition, the ever-increasing prison population is expected to reach 24,639, forcing the state to hire more correctional officers and build new prison facilities.

Once money was budgeted for those big-ticket items, there was little left for anything else, said Frederick W. Puddester, the governor's deputy budget secretary.

He said the budget reflects the demands of Maryland's changing population, in which the number of children and elderly is increasing at the fastest rate. More children means more spending on education, while the increasing elderly population is straining the state's medical-assistance programs.

The segment of the state's population between the ages of 18 and 64 -- the tax-paying population -- is growing the most slowly, he said.

In an attempt to make new spending as cost-efficient as possible, and to bring down the growing long-term cost to the state of caring for the poor and housing adult and juvenile criminals, Mr. Schaefer said, he is concentrating new spending on a broad range of prevention programs. The idea, he said, is that it is cheaper for the government to prevent problems now than pay for them after they occur. Among his ideas:

* To give 4,000 more 4-year-olds a head start on learning, he has increased funding for pre-kindergarten classes. To keep teens in school, he has boosted funding for a drop-out prevention program. To keep the disabled employed, he has added money for vocational rehabilitation.

* To keep children out of foster homes, he wants to spend more money on programs that help their families stay together. Similarly, to keep the elderly out of costly nursing homes, he has boosted spending on care for senior citizens.

* To prevent diseases and other medical problems that often result in expensive hospital stays, he has restored money cut from previous budgets for local health services.

* To discourage unwanted births, he wants to spend more on birth control and family-planning counseling.

The only way to prevent the increasing welfare caseload, the influx of prison inmates and the expanding Medicaid rolls from bankrupting the state, Mr. Puddester said, "is to prevent these things from happening before they become problems. That is the major focus of the '94 budget."

The level of proposed new spending worried legislators yesterday.

"As an overall increase, it seems excessive relative to the available resources and the economic conditions," said Senate Minority Leader John A. Cade, R-Anne Arundel. "We're not out of the woods yet."

Doubly battered by a huge drop in state revenue and a relentless surge in the number of people on Medicaid (up 33 percent since 1990), on welfare (up 27 percent) and in prison (up 33 percent), the governor and legislature have been forced to trim almost $2 billion from other programs the past three years -- even as the overall budget continued to grow.

Gun-shy, some legislators are saying they do not want to approve another budget and find themselves back in special session again, as they were in November, facing another deficit.

"I don't have enough confidence in these estimates to extend ourselves that much," said Senator Cade, a member of the Budget and Taxation Committee. "I'd be looking to cut back."

Much depends on the performance of keno, which some legislators want to abolish.

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