$13.4 billion budget: Fatter than it looks

March 22, 1994|By John W. Frece | John W. Frece,Sun Staff Writer

The House of Delegates this week will consider a proposed $13.4 billion state budget that appears to slash the governor's original spending plan by a whopping $255 million.

But the revised budget is not quite what it seems at first glance. Roughly a third of the cuts touted by the House Appropriations Committee have more to do with budgetary gimmickry and election-year sleight of hand than real reductions in state spending.

For instance:

* The committee rang up $87 million in cuts simply by lowering its estimate of how much the Medicaid health program for the poor will cost next year. But lawmakers know full well that, regardless how much is budgeted, the state will eventually have to pay for the medical bills that recipients incur, whatever they are.

* Committee members also claimed $70 million in reductions by killing the programs Gov. William Donald Schaefer tied to his proposed quarter-a-pack increase in the state's cigarette tax. But, even as they made that cut, the committee chairman and other House leaders acknowledged they are lobbying for a 12 1/2 -cent increase that would make possible many of the same programs they now are claiming as cuts.

* They set $20 million aside to cover an old debt to Blue Cross and Blue Shield of Maryland that they acknowledge could be as high as $26 million. And they put off until future years a separate obligation to Blue Cross that could cost as much as $46 million by the end of 1997.

When the budget comes to the House floor this week, committee members are expected to make much of their skill in delivering a spending plan that is under the General Assembly's self-imposed goal of holding growth in state spending to 5 percent. The governor's budget would have increased spending 6 percent.

But to squeeze the budget until it fit inside the legislature's arbitrary "spending affordability" limit -- a cap theoretically tied to the growth in personal income in Maryland -- lawmakers employed some bookkeeping techniques that reveal their adherence to the limit is something of a charade.

"We've been given a document that obfuscates what the needs are or where the growth is in the budget," complained House Minority Leader Ellen R. Sauerbrey, a Baltimore County Republican, candidate for governor and frequent critic of the Democratic-controlled legislature's handling of fiscal matters.

Despite Ms. Sauerbrey's criticism, an alternative Republican version of the budget adopted most of the spending reductions recommended by the Democrats.

Del. Howard P. Rawlings, a Baltimore Democrat and the Appropriations chairman, called the budgeting techniques "prudent fiscal planning on our part" and broadly defended the ++ House plan.

"We are doing very little damage to local government, and very little damage to programs that serve the people in this state. It is a budget we can be proud of," Mr. Rawlings said. "What we have done is to provide a hedge against deficits, mainly that might come about because of a reductions in federal programs."

One such hedge, proposed by the House committee as well as the full Senate, involves the unusual step of setting up a $20 million account designed specifically to cover "deficiencies" -- programs that end up costing more than lawmakers have left in the budget for them.

A similar reserve has been set up for Medicaid.

In some cases, lawmakers have financed programs with funds they are not required to count under their "spending affordability" rules.

In his original budget, for example, the governor requested $25 million to help private colleges and universities.

The Appropriations Committee trimmed the request by $5 million -- then put the money back by substituting money from a fund set up for the purchase of the Peabody Institute's art collection. The Peabody money does not get counted under the spending affordability rules.

But today's trade-off is often tomorrow's cost: A future legislature will probably have to sell bonds -- with taxpayers paying the interest on them -- to restore the money that was taken from the art fund so the state can fulfill its commitment to buy the collection.

Mrs. Sauerbrey and other Republicans complain that failing to make genuine cuts in spending now, and deferring some obligations to future years, will only make worse a budgetary shortfall that the legislature's own fiscal advisers predict could reach $225 million by fiscal year 1997.

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