Schaefer riles tax foes with pushy budget

January 19, 1994|By John W. Frece | John W. Frece,Staff Writer

Gov. William Donald Schaefer has always had a way of pushing state legislators further than they want to go, and his $13.5 billion budget for the coming year is perfectly in character.

It is unrelenting, ambitious and already controversial, a spending plan more reflective of Mr. Schaefer's personal drive and goals than of his status as a lame duck beginning his final session.

Not only does his budget violate the election year taboo against raising taxes, but it also tests -- again -- the General Assembly's determination to stick to its own self-imposed limit on overall spending.

"It is not the budget of a shrinking violet who is in his last term," said House Appropriations Committee Chairman Howard P. Rawlings, a Baltimore Democrat, who like other legislative leaders was briefed on the spending plan yesterday. The rest of the 188 lawmakers will formally receive copies of the budget today.

In a year when state revenue is expected to increase by about 4.5 percent, and a legislative oversight committee gave the governor leeway to increase spending by 5 percent, Mr. Schaefer chose instead to propose a budget that would boost state spending by 6 percent.

As he indicated in his State of the State address last week, the governor plans to pay for the additional spending by raising Maryland's tax on cigarettes by 25 cents a pack, to 61 cents. That would give the state the second highest cigarette tax in the nation, trailing only the District of Columbia's 65-cents-a-pack tax.

To make the tax increase more appealing, the governor -- as he has in the past -- tied its revenues to programs that he knows state legislators, local officials and special interest groups will find hard to resist.

The money would pay for $25 million in grants to local governments to spend any way they wish, and provide another $25 million for various public school programs that are likely to be particularly appealing to the vote-rich delegations from Baltimore City and Prince George's and Montgomery counties.

It also would provide $13 million to help the developmentally disabled and $7 million in assistance to the homeless, the elderly and others.

Mr. Schaefer turned to the cigarette tax not only as part of a prevention campaign to discourage smoking and reduce the incidence of cancer in Maryland, but also to pay for programs that his budget advisers said would not be possible with just the normal growth in state revenue.

Without the tax increase, spending in the governor's budget would increase by 5 percent, or by $327 million. Nearly all of that, however, would be consumed by legally mandated increases in state aid to local governments, primarily for education ($112 million), by higher enrollment and inflationary increases in the Medicaid program ($97 million) and by a 3 percent pay raise and step increases for state employees ($73 million). State workers have gone without a cost-of-living increase the past three years.

By the time the governor also provided money to open the new Central Booking Facility in Baltimore and expanded prisons in Baltimore and Jessup and paid for a $27 million increase in the debt service the state owes on capital projects, there was little left for anything else, his budget aides said.

But House Minority Leader Ellen R. Sauerbrey, a Baltimore County Republican and frequent critic of Mr. Schaefer who has consistently fought his tax and spending proposals in recent years, said the governor should learn to live within the revenues he has.

"The overall reaction I have is that we are continuing to try to grow the size and growth of government beyond what our economy can afford," said Mrs. Sauerbrey, who is a candidate for governor.

"Last year, when the governor knew it was politically hazardous to come in with a tax increase, he used Keno so we could spend more than our economy was raising. This time, he goes to the tobacco tax, which we increased just two years ago."

She predicted that the cigarette tax, like Keno, may not bring in the revenue predicted but the state would be stuck with the new spending programs, which she said would only become more costly over time.

The chairmen of the assembly's two budget committees expressed a different concern over the budget: Delegate Rawlings and Sen. Laurence Levitan, chairman of the Budget and Taxation Committee, said they are not necessarily opposed to raising the tax on cigarettes, nor to the programs Mr. Schaefer would finance with the tobacco tax revenue.

Rather, they said, they are worried that the additional spending would violate the recommendation of the legislature's Spending Affordability Committee that the overall increase in spending not exceed 5 percent. It is a voluntary limit, but one that Mr. Rawlings said lawmakers guard "very jealously."

"That absolutely causes a problem," Mr. Levitan agreed. "Those of us on the budget committees generally spend more attention on spending limits than others do."

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