$19.6 billion Md. budget lacks tax cut

Glendening proposes increased spending on colleges, cancer

4% raise for state workers

Tobacco settlement, $1 billion surplus fuel ambitious package

January 19, 2000|By Thomas W. Waldron and Gady A. Epstein | Thomas W. Waldron and Gady A. Epstein,SUN STAFF

With the Maryland treasury flush with cash, Gov. Parris N. Glendening proposed yesterday an ambitious $19.6 billion budget for next year that includes an unprecedented college construction program, funds for cancer research and state employee salary increases -- but no significant tax relief.

The governor's budget, which is built on a $1 billion surplus and the state's first installment of its legal settlement with the tobacco industry, is 9 percent bigger than this year's, the largest increase in a decade.

"It gives us an extraordinary opportunity to address some of the state's long-term needs," Glendening said. "I'm fortunate to be governor at this time."

Glendening is using the windfall in part to make a substantial investment in higher education, to pay for his promises on K-12 school construction and, as he announced Monday, to help pay for two big-ticket transportation projects.

And he's putting a half-billion dollars in state savings accounts for use in subsequent years.

The proposal calls for $364 million in construction projects for the state's colleges, community colleges and universities and a 12 percent increase in the higher education operating budget.

The governor also included $256 million for public school construction and renovation.

A host of state programs would receive double-digit percentage increases, including 17 percent for foster care, 14 percent for supervision of juvenile delinquents and 20 percent for housing and community development.

But Glendening disappointed some leading legislators by proposing a relatively small increase in the operating budget for public schools.

"The most troubling part is that in this budget during a period of unparalleled wealth for the state, our public schools are only going to receive about a 3 percent increase in their operations costs," said Del. Howard P. Rawlings, chairman of the House Appropriations Committee. "Clearly, the governor has made a change in his priorities."

Still, the budget, to be submitted today to the General Assembly, won generally favorable remarks from Rawlings and other Democratic legislators.

Democratic leaders uniformly called it fiscally responsible despite being $68 million over the legislature's self-imposed spending limits. The Assembly can cut the governor's budget but not add to it.

But Republicans said the budget calls for too much spending and increased state debt while making little progress on cutting taxes.

No speed-up in tax cut

Glendening's budget takes into account the first phase of a proposed cut in Maryland's inheritance tax, but it does not include other reductions such as speeding up the state's five-year, 10 percent income tax cut.

"We really want to accelerate the 10 percent income tax all in this year," said Del. Robert H. Kittleman of Howard County, the House minority leader. "We think that it can be done."

The governor has so far resisted calls to move up the schedule for the income tax cut, which was passed in 1997 and is to be fully phased in by 2002.

"I believe at this time, the most prudent approach is to invest in higher education and transportation," Glendening said.

Democratic lawmakers support an acceleration of the tax cut, but they generally praised Glendening's spending plan.

"For the most part, he's got his priorities in order," said Senate President Thomas V. Mike Miller. "It's a budget that certainly will be modified by the General Assembly but not gutted in any sense."

"It's a beautiful budget," gushed Sen. Barbara A. Hoffman, chairman of the Senate budget committee. The spending on higher education projects, she said, is "long overdue."

"There's really quite a backlog on the college campuses and most of these are not cheap buildings," said Hoffman, a Baltimore Democrat.

Republicans, meanwhile, said the growth in spending is out of line with the growth in the state economy and unnecessarily adds to the state's debt during a time of plenty.

Budget called `reckless'

While Glendening's plan saves money on interest payments by calling for nearly a half-billion dollars in cash payments on building projects, the budget would still add about $160 million in state debt for other construction.

"The budget is reckless," said Del. Robert L. Flanagan of Howard County, the House Republican whip. "Maryland is still stuck in the mentality that we should borrow more and more. We're sticking it to the next generation."

While much of the state surplus is being used to pay for construction projects or continuing state spending, Glendening is proposing to transfer nearly a half-billion dollars of excess revenue into the state's savings accounts.

With that infusion, the state's reserve fund is forecast to swell to more than $1 billion in the coming year.

Glendening said much of that reserve would be eaten up in subsequent years by construction costs and the final phase-in of the 1997 income tax cut.

Good news for colleges

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