Deep budget crisis looms in Annapolis

Predicted: Maryland pays a price for acting as if big surpluses would last forever.

November 02, 2001

MORE PRUDENT states knew the era of handsome budget surpluses couldn't last. They acted last year to bring spending and revenue projections into line.

But Maryland ignored the warnings of its own best fiscal minds. Their advice: Hope for the best, but plan for the worst.

Now the worst is at hand -- and far worse than anyone could have predicted.

The state faces a gap of $1.7 billion between spending and current revenue projections. Potential causes and culprits abound.

The catastrophe of Sept. 11 may come at the head of the line, but it is the least culpable. An economic downturn hurts, to be sure, but it was predicted by those who said the good times wouldn't roll forever. Add to those concerns the rapidly rising -- and curiously underestimated -- cost of medical care for the poor. But the fundamental cause is executive and legislative leadership that preferred to believe the economic party would last forever.

"The big problem is that the budget we passed last session was unsustainable. This budget was in trouble from the minute we passed it," said state Sen. Robert R. Neall, an Anne Arundel County Democrat.

One example: Medicaid costs now appear to be $173.1 million above predictions. That budget, legislative analysts say, was based on what they call "spurious assumptions": namely, that the program would serve about 420,000 people. That figure apparently assumed many people would leave the system because 20,000 more -- 440,000 -- were on the rolls at the time the lower figure went into the budget. Instead of declining, the number of people receiving care has gone up.

Officials must now consider a number of difficult solutions. Services for the mentally ill are already being constricted. Some building projects have been delayed, and others may follow. The $725 million rainy day fund almost certainly will be wiped out. New taxes could be discussed, though the assembly will be meeting in an election year. Pressure will likely grow for allowing slot machines at the race tracks.

What the state needs first, though, is political leadership with the courage to be honest enough to tell the voters when the limits of responsible spending have been reached.

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