Facing reality

March 14, 2003

AFTER PAINTING himself into a fiscal corner, Gov. Robert L. Ehrlich Jr. now tiptoes toward a less confining position. Wisely, he's signaled a willingness to consider increasing taxes to close the widening gap between income and spending.

He ought to follow up with a decision to put off slots for at least a year.

The governor's new flexibility follows a report that tax collections are $218 million below expectations. With a still-lagging economy and the imminence of war, the falloff might have been anticipated. Instead, some General Assembly leaders and the governor devoted themselves to passing slots.

It ought to be clear now that slots won't solve the problem. The revenue report reinforces the need for serious study of overhauling Maryland's fiscal structure.

In the short term, lawmakers and the governor must now find a total of $613 million to balance the budget. Clearly, new or increased taxes are needed.

Some $37 million more may be taken from the state's higher education budget, forcing layoffs that could reach 1,000 or more. Damaging hits are likely in other areas - unless revenue-raising options are chosen instead, as they should be. Marylanders are not likely to look favorably on the shredding of fundamental programs.

Mr. Ehrlich has suggested he would consider an increase in the state property tax, passed to pay construction debts. Income from that tax has not kept pace, another sign that Maryland's tax structure needs updating. If the tax were increased, the general fund would have an estimated $165 million more for budget-balancing. Another $100 million might be raised via higher filing fees and corporate taxes. These revenue moves alone would be insufficient.

With the legislature moving toward its conclusion, the Assembly looks now at what some are calling "Slots-plus," a combination of taxes accepted by the Ehrlich administration in exchange for a slots bill. The House of Delegates has done a good job of illuminating the weaknesses of slots. Now it must reject a bad compromise.

Indeed, the widening gap between spending and income should make the current slots proposal even less attractive. If slots are coming - and we hope they are not - they ought to come with the financial bang Mr. Ehrlich and others have promised. That's clearly not the case now.

Maryland might get far more money if the state itself ran the slots emporiums. The current legislation essentially splits the revenue with track owners - as if that were the only way to proceed. Surely it isn't.

If slot machines must come to Maryland, let them come in a measured, carefully thought out way. The odds should be with the taxpayers - and that's not the case now.

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