State Budget: A Quiet Tilt

BARRY RASCOVAR

April 11, 1993|By BARRY RASCOVAR

"Basically, it's been a boring budget year," according to Gov. William Donald Schaefer's chief numbers cruncher, Fred Puddester. Ho hum. But, oh, what a relief!

For the past three years, budgeting has been an agonizing process in the Maryland State House.

The recession made revenue estimating less predictable than weather forecasting.

Ballooning government expenses -- mainly from the surge in the number of jobless and penniless -- compounded the problem, which was resolved only through a never-ending stream of tax and fee increases, program cuts, local aid slashes and bitter bickering between governor and legislature.

Not this year. The economy has stabilized enough to make the governor's life easier, and the legislature's work almost painless.

Governor Schaefer's initial $12.7 billion proposal emerged largely intact. What changes were made trimmed $200 million in excess funds and fortified Maryland's conservative approach to the next fiscal year. Legislators didn't even come close to deadlock. They passed the budget with plenty of time to spare before the constitutional deadline.

Yet behind the mundane numbers, a far-reaching transformation took place: Legislators and the governor quietly re-directed more of state government's local aid money toward the have-nots.

This subtle shift began last year. In the spring, legislators cut $40 million in revenue-sharing that often favored well-off counties. Then in the fall, legislators reluctantly ended a $147 million program that subsidized local government's Social Security payments for teachers and librarians. The biggest beneficiaries of this program were the most affluent counties, which could afford to pay the highest salaries and thus receive the lion's share of state aid for Social Security contributions.

Legislators didn't want to end this program, but the recession's continuing impact created another deficit gap that had to be closed. Every subdivision suffered from the cuts, but the haves absorbed the most pain.

In the budget enacted last week, local governments recouped all the money they had lost last year, plus another $30 million. But there was a big difference in the way the new aid is being distributed. Most of the cash will be doled out through formulas that favor the state's impoverished subdivisions.

The cumulative effect shapes up this way: affluent Montgomery County lost $27 million in state aid last fall but gained $16 million last week, for a net loss of $11 million. Financially strapped Baltimore City lost $18 million last fall but picked up $45 million last week, for a net gain of $27 million.

In other words, far more state aid is now earmarked for subdivisions with the greatest need.

But the haves weren't forgotten. They were given greater leeway to raise extra tax dollars themselves through a 20 percent rise in the piggyback income tax ceiling. And then last week, the legislature threw in a few more bonuses: an extra $6 million for mainly affluent counties with large numbers of non-English-speaking students and $6 million for counties with above-average school attendance records.

As for the state's poorest subdivisions, they were given a $36 million pot known as a "disparity grant" to help offset their inability to raise sufficient local revenue through a higher piggyback tax. Last week's decision to hand out increased state aid -- most of it in new education dollars -- on the basis of economic necessity rather than population signals another step

in the direction of wealth redistribution.

These actions are in line with the recommendations of the much-abused Linowes commission on tax reform. It formulated three visionary ground rules:

"* It is in the interest of every Marylander that the entire state be in sound economic health. We cannot accept a situation in which certain parts of the state lag severely behind others, dragging the overall economy down.

"* It is in the interest of every Marylander that every child in our state be given the opportunity for a quality education, and thus the ability to become a productive citizen.

"* It is in the interest of every Marylander that each jurisdiction in the state be in good fiscal health and offer a decent quality of life for its citizens."

Last week's budget votes further these goals. In the process, Maryland government is re-defining its role. It is re-directing more of our tax dollars toward areas of the state least able to help themselves.

Well-to-do counties are much better able to fend for themselves; Annapolis' main role should be to see that impoverished subdivisions have the resources to deliver decent schooling and other basic services to residents. Tilting local aid in their direction was long overdue.

Barry Rascovar is editorial-page director for The Sun.

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