The Scarlett O'Hara approach to budget deficits

January 25, 2004|By C. Fraser Smith

THEY'VE FACED down the budget monster, driven it back into its hole, dismissed it so cavalierly that many in the kingdom may believe there is no deficit.

They have balanced their $23.8 billion budget with a nip here, a tuck there, a deft transfer, a shift, a blink and a nod.

They have located hidden stashes of cash. They have used an assistant attorney general's opinion to reduce their commitment to the education budget. They have been resourceful and creative.

Or, perhaps, they have discovered that state government can push debt into the future the way Americans treat credit card debt. It`s the Scarlett O'Hara approach: I'll deal with it tomorrow.

Gov. Robert L. Ehrlich Jr. and his estimable budget secretary, James C. "Chip" DiPaula Jr., come to us yet again as miracle men. Even as they are cutting almost everything, they have whomped up a whole new department with no new revenue, the fiscal version of making bricks without straw. Theirs is a tour de force of making do, of happily hanging on until help arrives.

But what is the nature of the hoped-for help? Slot machines? Yes. And what else? More magic? More will be needed. Slots alone won't take care of the deficit that is expected to balloon to $1 billion next year, higher the next. Does the governor believe slots are the ultimate answer? No, says Mr. DiPaula, he believes they are part of the answer. What is the rest of the answer? Growth and efficiency, Mr. DiPaula said during last week's budget presentation.

As far as it goes, the Ehrlich spending plan is remarkable. It avoids a collision with the deficit, but a collision was needed in the public interest.

The administration's chief critic, House Speaker Michael E. Busch, begins his review by saying that budget balancing is a matter not of magic but of simple arithmetic, leadership and common sense.

Mr. Busch says Maryland could quickly deal with its present and future budget problems by doing what Virginia is preparing to do: a comprehensive modernizing of the tax structure. A major Republican leader in the commonwealth proposes to make its income tax more progressive -- to modernize the whole package.

Maryland, more progressive than conservative Virginia, should follow the lead of its neighbor to the south. Otherwise, Mr. Busch warns, Virginia will be ahead of Maryland in its pursuit of new business, which wants a government that can build roads and produce a quality, well-educated work force.

If a careful analysis were done, Maryland could solve its budget problem equitably and faster than Merlin could wave his wand. It could add a penny to its sales tax, a remedy that would raise half or more than half of the $1 billion deficit. There are other solutions. The governor's job is to choose one that solves the problem.

More deficit-chasing revenue might come from slot machines should they be legalized. Contrary to those who would demonize him, Mr. Busch does not close the door on slots. The speaker remains opposed, regarding the slots solution as unworthy of a state that claims to revere public education. But, he says, if we're going to do it, let's do it right.

The House Ways and Means Committee, following the speaker's direction, is expected to offer a slots road map this week. It will suggest state-owned slots shops built by the Maryland Stadium Authority on state-owned land run by managers selected via the bid process. If the idea is to keep Maryland gambling money in Maryland, Mr. Busch says, state control is the way to go. He opposes Governor Ehrlich's plan to put slots at racetracks as an obscene enrichment of track owners.

Here again is the further point: Slots alone wouldn't solve the problem. Hundreds of millions more would be needed to close the gap between spending and income.

"It's as if your roof and your walls are all leaking -- and you're talking about what color to paint your front door," Mr. Busch says of the slots-only approach.

It's possible, the speaker concedes, that Mr. Ehrlich is winning the public relations race.

"He's a very affable guy," Mr. Busch says. "People like him. I like him. But sooner or later the problem has to be addressed."

People will see, sooner or later, that they're already paying higher taxes -- state and county property taxes have gone up, local income taxes have gone up and college tuition has gone up. More so-called niche taxes are coming. The speaker's lament: trickle-down, patchwork taxation is inherently unfair, inefficient and doomed to fail. The endgame is a comprehensive approach.

Seems simple enough. But the deficit has been around for so long that people may have begun to wonder if it's real or if it's really much of a threat. Mr. Busch wants to deal with the deficit this year, but some in the General Assembly are wondering whether they shouldn't just take the governor's approach, go home and let the deficit do its worst. Reminds me of a line from the old blues song about cocaine: "They tell me it'll kill me, but they won't say when."

C. Fraser Smith is news director for WYPR-FM. His column appears Sundays.

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