State surplus seen as sizable

Analysts say Maryland will end fiscal 2000 with $619 million overage

`It's astonishing'

Figures likely to fuel debate over tax cut, other ways to use it

October 13, 1999|By Thomas W. Waldron | Thomas W. Waldron,SUN STAFF

The Maryland budget picture got even better yesterday as legislative analysts predicted the state will end this fiscal year with a surplus of more than $600 million.

The projected surplus is in addition to the $320 million surplus the state accumulated in the last fiscal year, according to the analysis.

The new figures, which were delivered to a committee of legislators and business leaders who set state spending limits, startled lawmakers who had grown seemingly accustomed to continually improving revenue statistics the past two years.

"That's a helluva big number," said Sen. Barbara A. Hoffman, the Baltimore Democrat who heads the Senate budget committee. "It's astonishing."

"I said, `My God, look at that bottom line,' " said Del. Thomas E. Dewberry, a Baltimore County Democrat and speaker pro tem of the House of Delegates.

The better-than-rosy revenue projections will prompt a feeding frenzy during next year's General Assembly session among proponents of certain government programs, and is certain to fuel calls for cuts in state taxes, lawmakers said.

"These numbers could grow embarrassingly large" before the legislature makes decisions in March about the state budget and taxes, said Sen. Rob- ert R. Neall, an Anne Arundel County Republican.

Neall and others have called for an acceleration of the state's 10 percent income tax cut enacted in 1997, which is due to be fully phased in by 2002.

Hoffman said she, too, will consider such an acceleration when the legislature reconvenes next year.

"It depends on what the public's priorities are," Hoffman said.

William J. Skinner, president of the Maryland Taxpayers Association, said the priorities are clear.

"The surplus ought to go to the taxpayers," Skinner said.

But Gov. Parris N. Glendening and other legislative leaders have rejected the idea of accelerating the income tax cut.

In a speech to the Maryland Chamber of Commerce in Ocean City this week, Glendening reiterated his intention to use the surplus to build or renovate public schools, college buildings and Maryland's road network.

Glendening has proposed spending $200 million in surplus funds on one big-ticket item -- a replacement for the Woodrow Wilson Bridge over the Potomac River -- over the next three years.

"What we have now is an extraordinary opportunity to invest in our future prosperity," Glendening spokesman Michael Morrill said last night.

The projected $619 million surplus represents a significant chunk of the state's General Fund -- its main budget account -- which is forecast to reach $9.7 billion for the fiscal year ending June 30, 2000.

The legislative analysts said they were increasing their revenue forecasts based on the state's continuing strong economy.

In particular, they predicted much larger than expected growth in personal income tax, sales tax and corporate income tax collections.

The analysts said they expect the state's economy and its revenue flow to slow a bit in the second half of next year. But even so, their early projections show the state accumulating an additional surplus of $392 million in the next budget year.

Pub Date: 10/13/99

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