Risky promises

October 16, 2002

THE CANDIDATES for governor of Maryland may have achieved a record this year for promises in a political campaign: Both say they will handle the state's projected $1.7 billion budget deficit with little disruption.

But they should worry about the difficulty of running the state under the restrictions they are placing on themselves: no cuts to education, no cuts in local aid, no layoffs of state employees -- and no new taxes or general tax increases.

Each candidate hopes to avoid a deficit reduction plan that costs them votes. But voters deserve to know in much more detail -- and before Election Day, Nov. 5 -- how they would fulfill their promises.

Neither plan fully addresses the fundamental budget problem: Projected revenue doesn't match planned spending. The current budget was balanced not with income but by cutting the "rainy day fund," by borrowing for construction projects instead of paying with cash and by dipping into other accounts -- stopgap measures that can't go on without real harm.

The Republican, Rep. Robert L. Ehrlich Jr., has a head start in the deficit-cutting race. He identifies a new revenue source: slot machines at the race tracks, creating up to $800 million a year in new money. But there won't be that much slots money right away. Slots licensing fees could provide some bridging funds. But Mr. Ehrlich needs to say more about what he would do if the General Assembly or, alternatively, the voters don't go along with him. Even if the Assembly approves them, a year or more may be needed to get new money.

He's right to call his plan a "framework." His promise to avoid new or increased taxes appears the firmest. But his framework needs more beams and rafters.

The Democrat, Lt. Gov. Kathleen Kennedy Townsend, has given herself the more difficult chore. She rejects slots. Her plan proposes another series of stopgap remedies, such as borrowing funds earmarked for transportation and for cancer research, anti-smoking campaigns and various educational uses. Give her credit: There is pain in here because it would take money from important programs. She gets points for candor by leaving open the possibility of a tax increase in her second year.

To cover the $1.7 billion gap, she says, she might have to dip into the state's $500 million reserve fund -- appropriately, since it's a rainy day. But it only delays a solution to the basic problem: more spending than income. It would create another deficit, this one in the rainy day fund. To keep the AAA bond rating, which makes borrowing less costly, the fund has to be replenished.

Both candidates propose to make savings by putting a freeze on state hiring. Freeze means something different to each of them. Ms. Townsend charges that Mr. Ehrlich's freeze would produce less savings than the 98 percent freeze she said is already in place. Until recently, though, the freeze has not been a "hard freeze." Mr. Ehrlich says his "flexible freeze" would be very much like the freeze actually implemented by Gov. Parris N. Glendening.

A special commission studying Maryland's financial condition will make proposals later this year for meeting the state's needs and for balancing revenue and spending. Its report is not due until after the election.

But the voters can't wait. The candidates must speak forthrightly about how they will deal with Maryland's short-term and long-term financial problems -- now.

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