Md. legislators agree on budget of $21.6 billion

Governor exercises his reduced power for favored programs

Tax cut, deficit next year

April 04, 2002|By David Nitkin | David Nitkin,SUN STAFF

Maryland House and Senate budget negotiators resolved their last differences in a $21.6 billion state budget yesterday, clearing the way for final approval of a package that preserves a promised income tax cut but leaves a huge deficit for the state's next governor.

In the face of a wobbly economy and shrinking tax receipts, 83,000 state employees will not receive salary increases next year, and hundreds of millions of dollars will be transferred from rainy-day accounts and accumulated reserves to pay for agency operations.

Still, the budget provides $160 million in new money for public schools, with the possibility of more on the way, and an additional $430 million for Medicaid.

In negotiations that spanned weeks and accelerated last weekend, Gov. Parris N. Glendening persuaded lawmakers to restore more than $46 million for university operations and campus construction, and $44 million for environmental programs that lawmakers initially proposed cutting.

State general fund spending - which includes most services used by taxpayers - will remain virtually unchanged from last year, reversing years of growth fueled by rising tax revenues.

Final passage by the Senate and House of Delegates is expected today.

Glendening and leading lawmakers have been parrying over the shape of the budget for the fiscal year that begins July 1. The governor, who will leave office in January, has been working to preserve his priorities in education and the environment. To pay for them, he proposed postponing the final installment of a five-year, 10 percent income tax cut.

But most lawmakers said they had to keep their promise in an election year, and they agreed on about $370 million in cuts to Glendening's proposed operating budget to pay for the break. The 2 percent tax cut will save the average family of four $75 in 2002.

"It appears that the legislature got what it wanted, which was to do the tax reduction and to make some changes for the structural, long-term" deficit, Glendening said. "And I got what I wanted, which was major funding for higher education and most of everything for the environment."

To reduce spending in future years, the budget lowers the base level for state funding of community colleges, private universities and poorer counties.

Through those moves and others, the projected gap between state revenues and expenditures - sometimes called a structural deficit - has been reduced by $420 million for 2004, to $780 million. That gap will face the next governor and General Assembly, to be picked by voters in November.

The final budget package delays $1 million of $12.1 million earmarked to remove lead paint from older Baltimore homes, although lawmakers first proposed withholding more.

Baltimore's drug treatment programs would get $7 million of the $9 million pledged by the governor. The spending plan also includes $3.75 million for textbooks for private and religious schools, down from $5 million suggested by Glendening.

He and lawmakers expressed regret that the budget contains no money for state employee pay raises, although it provides a one-time bonus averaging about $300 per worker.

The apologies ring hollow with many workers, said Sue Esty, legislative director of the American Federation of State, County and Municipal Employees Council 92, because delegates, senators and the next governor will all receive higher paychecks next year.

Lawmakers even tucked increased salaries for the attorney general, treasurer and other constitutional officers into a separate budget-balancing bill yesterday, conceding that the insertion was of dubious legality.

"State workers feel like stepchildren in the budget process," Esty said. "Employees will be asked to do a whole lot more with no real compensation increase. If people think the lines are long at the Motor Vehicle Administration now, wait until this budget goes through."

Over the past few days, Glendening pushed legislators to restore some of their cuts to his signature initiatives. He summoned budget negotiators to his mansion Sunday night and spoke with lawmakers by phone all week.

"He used the word `personal' five times in the conversation," said Del. Howard P. Rawlings, the Baltimore Democrat and House Appropriations Committee chairman, referring to a Tuesday telephone call from the governor.

Observers have been curious as to how a lame-duck governor would fare in a tight budget year. To be sure, Glendening has been disarmed of some tools: The legislative redistricting process that many lawmakers feared is over, and the weak economy meant less money for pet projects.

But he found others.

At one point, he threatened to veto the separate budget-balancing bill, known as the Budget Reconciliation and Financing Act.

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