Blueprint to balance budget is proposed

Analysts offer $850 million in cuts, revenue boosts

February 01, 2003|By David Nitkin | David Nitkin,SUN STAFF

State legislative analysts released yesterday an $850 million collection of budget cuts and revenue-boosting maneuvers that form a distasteful blueprint for lawmakers facing the most daunting fiscal crisis in a decade.

The list offers more than enough money for the General Assembly to replace the projected proceeds from the slot machines Gov. Robert L. Ehrlich Jr. has included in his plan. As questions about the merits of the gambling proposal grow, its rejection has become a distinct possibility.

Among the items under consideration are taking back $100 million in income taxes that is supposed to be distributed to counties; stripping $22.5 million in aid to private colleges; eliminating $30 million worth of vacant jobs; and tripling the alcohol tax to generate $75 million.

"They're horrible. They really are," said Sen. Robert H. Kittleman, a Howard County Republican and member of the Senate Budget and Taxation Committee. "It's driving home the stark reality of our budget situation. People say, `I don't want slots, and I don't want cuts.' But if you don't do slots, you have to take some of these."

Warren Deschenaux, head of the General Assembly's Office of Policy Analysis, said he crafted the list with an eye toward Ehrlich's pledge to veto any sales or income tax increases.

As a result, the proposal to add $401 million in revenue - which analysts called "loophole closing and tax policy improvements" - was not immediately rejected by James C. "Chip" DiPaula, Ehrlich's nominee for budget secretary.

"There's nothing there we haven't seen before," DiPaula said yesterday, stopping short of saying that Ehrlich opposed the measures. "Most of these things were known to us. And we think the governor's budget is the best solution."

The list is a working document that lawmakers will add to and subtract from as they continue deliberations over the next few weeks, then vote on whether to accept or reject each item.

Many of the choices could become law as legislators seek to change parts of Ehrlich's budget.

Two weeks ago, Ehrlich released a $22.8 billion spending plan that would close a gap of more than $1.2 billion between revenues and expenses through roughly equal amounts of program reductions, transfers from surplus accounts and money from slots.

Many lawmakers initially gave the plan high marks, but criticism of several aspects grew. Some say the governor didn't cut deeply enough and would leave a $700 million shortfall in the subsequent fiscal year, which will begin July 1, 2004, even if slots were legalized.

Some transfers - such as withholding for state use $102 million in highway funds that is supposed to go to counties - also face serious opposition.

The legislative list would almost double the cost to local governments, a prospect foreshadowed earlier in the day by Baltimore County Executive James T. Smith Jr.

Smith told a group of business leaders yesterday that he is skeptical about the chances that legalized slot machines will pass the General Assembly this year. The bill's failure, he said, could have devastating consequences for local governments.

He said he doesn't think the governor has been lobbying hard enough for the gambling proposal, making him fearful that deeper cuts are coming.

Ehrlich spokesman Henry Fawell disputed Smith's assessment, saying, "The governor has been personally lobbying members of the legislature since he was elected. He has a number of members of his senior staff walking door to door in Annapolis with the legislature to ensure that we receive a majority of the votes in both houses."

Other cuts offered by analysts include $13.4 million by ending tuition reimbursement for higher education employees, $15 million by scaling back initiatives proposed by Ehrlich and $5 million from ending a program to buy textbooks for private schools. The proposed reductions total $454 million.

New revenue ideas include $75 million through closing corporate tax loopholes, $45 million by imposing a premium tax on health maintenance organization policies and $45 million through increasing the filing fees for corporations.

Sun staff writer Andrew A. Green contributed to this article.

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