Gov.-elect Robert L. Ehrlich Jr. reaffirmed yesterday his pledge not to raise sales or income taxes, even as state analysts forecast another year of grim fiscal conditions for Maryland.
In his most extensive comments on the state budget since the election, Ehrlich said: "Please trust us, income taxes and sales taxes are off the board. Period. End of discussion."
The Republican also all but ruled out a proposal by Gov. Parris N. Glendening to give a 2 percent salary increase to state employees. Ehrlich said the raises would force him to lay off thousands of state workers and make a difficult budget situation even worse.
"The facts speak for themselves," Ehrlich said while attending a briefing where the Maryland Board of Revenue Estimates projected a $1.8 billion budget shortfall over the next two years. "The numbers are the numbers, and the facts are the facts."
He reiterated his belief that legalizing slot machines at racetracks can close much of the gap, hinting that aid to local governments could bear the brunt of cuts if the legislature refuses to pass his proposal.
The board projected that the state has a deficit of $550 million in the fiscal year that ends in June and will have a $1.2 billion gap next year. Maryland's overall budget is about $21 billion, but the deficit applies mostly to the $10.5 billion general-funds portion that goes to pay for most state services.
Noting that shortfall, leading Democrats criticized Glendening's proposal to give state employees a pay raise and Ehrlich's refusal to even consider additional sales or income taxes.
Glendening's salary offer "struck me as so out of line with fiscal reality," said state Treasurer Nancy K. Kopp. "It didn't occur to me that they were negotiating something like this."
But Ehrlich's stance on taxes, the Democrats said, will trigger extensive layoffs and significant cuts to local aid - the very things he is trying to avoid.
"If he is not willing to be creative in dealing with this problem then we will have to correctably lay off thousands of state workers, cut aid to local governments and wreak havoc with the programs that serve the needs of citizens of the state," said Del. Howard P. Rawlings, a Baltimore Democrat and chairman of the House Appropriations Committee.
David F. Roose, director of the Board of Revenue Estimates, said the state's fiscal situation is forecast to improve - albeit slowly - later next year.
"The economic outlook for the near-term future is cautiously optimistic," said Roose, but he added that "major changes" in the budget are needed in the meantime.
Ehrlich and Lt. Gov.-elect Michael S. Steele, who also attended the briefing, said they intend to avoid layoffs by cutting some government programs, consolidating some state agencies and transferring pots of unused state money into the general fund.
But the governor-elect refused to rule out higher gas taxes or increases in other fees.
"My instructions to my [budget] team was to come back to me with a budget that does not try to impact warm bodies," Ehrlich said.
Comptroller William Donald Schaefer, chairman of the Board of Revenue Estimates, said Ehrlich "has the most difficult task of any governor" in his lifetime. "Every penny has been stripped out of this budget," the former governor said. "There is no money left."
But Schaefer, a Democrat who has been informally advising Ehrlich on budget matters, also was skeptical of Ehrlich's pledge not to increase sales or income taxes and suggested that he should reconsider it.
"I don't think when he was running he had a full impact of what a $1.7 billion deficit is," Schaefer said. "You say a lot of things during the campaign, but you don't know what the true situation is."
Senate President Thomas V. Mike Miller said Ehrlich has yet to fully grasp the state's fiscal picture.
"Hopefully he is going to get his slots proposal, but it is still not enough," Miller said. "In fairness to him, he has been in Congress a long time, and he has not had his opportunity to review and understand fully the state's budget situation. ... It is time to stop campaigning and start governing."
Ehrlich has said the state could eventually raise up to $800 million a year by placing 2,500 slot machines at four Maryland racetracks.
He signaled that aid to local governments could be significantly cut if the legislature fails to approve his slots proposal.
"I am just saying ... maybe local subdivision folks should talk to their members" of the General Assembly, Ehrlich said.
Earlier yesterday, Montgomery County Executive Douglas M. Duncan met with Ehrlich privately for the first time since the election. After the meeting, Duncan noted Ehrlich's campaign commitment to not cut aid to local government.
"That is the pledge he made," Duncan said.
But Miller said county executives should brace for cuts in state aid - even if slot machines are legalized - because aid to local government accounts for a third of state spending.
