$16.5 billion Md. budget proposed Glendening takes advantage of election-year surplus

State of the State to be delivered to Assembly today

January 21, 1998|By Thomas W. Waldron and C. Fraser Smith | Thomas W. Waldron and C. Fraser Smith,SUN STAFF

Taking advantage of a hearty election-year surplus, Gov. Parris N. Glendening proposed a $16.5 billion budget yesterday that includes tens of millions in new spending for schools, colleges and health care, but no new tax cuts.

The governor said he believes it is not "prudent" to accelerate the five-year, 10 percent income tax cut enacted last year or to reduce taxes further.

"It's a sound plan based on paying our bills up front and investing in our future second," Glendening said of his proposal, which will be formally submitted to the General Assembly today.

Although he made clear that he is skeptical that the state could afford further tax relief, he left the door open to consider any such proposals from the legislature.

Glendening's plan appeared to be crafted with an eye toward political balance: an impressive array of new initiatives that might resonate with voters, laced together with words such as "sound" and "accountable."

The governor's budget calls for a 5.1 percent increase in spending in the fiscal year that begins July 1. It includes $222 million to build and renovate schools -- up nearly 50 percent from this year; $18 million in new money for the developmentally disabled; a pay raise for state workers; money for additional prison guards, and $59 million in new aid for colleges and universities.

There are also smaller goodies such as $1 million for a new "community court" to handle minor crimes in Baltimore and $6.3 million for a 12th medical-rescue helicopter. The governor's budget is so full of new spending that it surpasses the nonbinding cap set by the General Assembly by $27 million.

Glendening shrugged off that fact by noting that the $27 million is a tiny portion of a $16 billion budget. But legislators said the Assembly would begin its work on the budget by cutting that amount from his proposals.

"They're all good things to do," said Sen. Barbara A. Hoffman, the Baltimore Democrat who heads the Senate budget committee. "But we'll have to figure out what level to fund them."

Glendening is proposing banking $100 million of this year's surplus -- now pegged at $283 million -- in the state's "rainy day" fund. The $100 million contribution would increase that reserve fund to $756 million next year.

But the governor's long-term spending plan calls for drawing on nearly $400 million of that in later years as the tax cut is fully implemented.

Even so, the plan projects a shortfall of $206 million in the fourth year. While there was no hard estimate available yesterday, state Budget Secretary Frederick Puddester said the deficit for the fifth year would reach beyond $350 million.

But Puddester said that when the time comes, the state would find a way to balance the out-year budgets, as required by law.

For now, with the election less than nine months away, Glendening can find good economic news wherever he looks.

Family income is up, as is job creation. And the number of welfare recipients is down 40 percent -- or 90,000 -- during his term in office, a drop that is saving the state $32 million this year alone.

The plan outlined yesterday rejects the urging of Republicans and some Democrats to offer further tax relief. "If the lowest tax rate is the most desirable thing, most people would be living in Mississippi," Glendening said. "It's a balance."

Republican critics were prepared to see his spending plan strictly in terms of the 1998 election.

"A lot of people think he's buying votes," said Del. Adelaide C. Eckardt, a Dorchester Republican.

She and other GOP officials conceded, however, that Glendening and his Democratic colleagues will enjoy improved political standing as long as they avoid too many long-term, expensive commitments.

"People will care about how the money is spent," said Del. Alfred W. Redmer Jr., a Baltimore County Republican. But he said the general feeling of economic well-being in the state -- underscored by low unemployment and a surplus -- "will make it more difficult to unseat" Democratic incumbents.

At their party caucus yesterday morning, the Assembly's Republican members urged Glendening to return at least $160 million to the taxpayers -- the equivalent of an additional 4 percent income tax reduction this year.

"If I had been governor," Republican gubernatorial candidate Ellen R. Sauerbrey said yesterday, "I would have had more of this money in the bank accounts of citizens. We would not have accumulated a surplus conveniently for election year largess."

Sauerbrey said, though, that if another tax cut is not approved, she, like Glendening, would support using some of the surplus for school construction.

Glendening declined to say yesterday how much each local jurisdiction will receive to build and renovate schools.

Those decisions won't come, he said, until he sees how much spending is approved by the Assembly -- and, observers of the inherently political process said, until he knows more about who will support his re-election bid.

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