Assembly falls short on budget gap

In year of tough choices, no long-term solution reached on fiscal woes

General Assembly

Analysis

April 13, 2004|By David Nitkin | David Nitkin,SUN STAFF

This was to be the year of rolled-up sleeves and tough choices, the year in which lawmakers would find a way to keep the state's books balanced for the long run.

The second year of a four-year term is traditionally a time for heavy lifting by the General Assembly, many State House veterans and political observers agree. Rookie legislators have adjusted to their jobs, a governor has settled in, and the next election is far enough away to allow for risky votes on taxes or other hot-button topics.

But when it comes to fixing Maryland's finances, lawmakers know they fell far short when the gavel banged down on the 2004 Assembly session at midnight.

"We did as best we could," said Senate President Thomas V. Mike Miller, a Prince George's County Democrat. "I don't see a lot of major initiatives. It's a lot of Band-Aids and a lot of patchwork."

In its final hours, the Assembly passed a $23.6 billion budget for the fiscal year that begins July 1 that is balanced without gambling proceeds or broad-based new taxes. But the spending plan does little more than pull the state through the next 12 months.

Analysts project a gap between revenues and expenses of at least $800 million in the budget that succeeds it.

Potential sources of new revenue to fill the gap were rejected. The House of Delegates turned down Gov. Robert L. Ehrlich Jr.'s slots bill for the second straight year. Ehrlich says he won't agree to a sales or income tax increase, so the House dropped its push for a package that would have raised taxes by a net $670 million.

Growing frustration over the lack of a solution led some lawmakers yesterday to raise the prospect of a rare special session to deal with slots and taxes. Miller and House Speaker Michael E. Busch said they could support such a move, and the Senate president said Maryland faces "fiscal hell" without more money. However, they agreed that bringing lawmakers back together would be unproductive unless an agreement is worked out beforehand.

"You only have a special session if you know what you are going to do ahead of time," Miller said.

The governor said he would "not be optimistic" about the prospects of a session devoted to slot machine gambling.

If lawmakers do not convene again before next year, deep cuts are expected for local governments and health programs, and could be unveiled in just a few months. The governor is required to propose a balanced budget, so the next spending plan he releases in January could include major reductions in a variety of programs.

"Our bag of one-time measures is nearly empty," said Sen. Ulysses Currie, the Prince George's County Democrat who chairs the Budget and Taxation Committee. "This pain is not going to go away until we take a big dose of reality."

Del. Norman H. Conway, the Eastern Shore Democrat who heads the House Appropriations Committee, said the legislature "failed at putting our fiscal house in order and putting our state on a course of fiscal balance."

The task will be more difficult next year and the year after, said Donald F. Norris, a professor of public policy at the University of Maryland, Baltimore County. As 2006 approaches, lawmakers will calculate with increasing wariness how their votes on taxes and spending could be used against them, he said.

"Nothing is going to get done that is at all risky," Norris said. "I think it is going to come back to haunt the General Assembly and the governor because they really did nothing to address the long-term deficits."

Despite the unresolved budget mess, the 13-week session yielded progress on a variety of issues, Busch said.

"There's a lot of initiatives that have passed that would have been the centerpiece of any term," said Busch, pointing to Ehrlich's transportation program and Chesapeake Bay restoration fee proposal, and a legislative effort to cap university tuition.

"We haven't found a fiscal solution," Busch said, "but ultimately it is the responsibility of the governor to bring these different philosophical viewpoints together."

Ehrlich dismissed the view of House Democrats who contend that a permanent solution is an immediate priority, saying yesterday that he would address the state's finances on a year-by-year basis. "My job is to submit a balanced budget each year, and I most assuredly will," he said.

But Ehrlich refused to outline where cuts might be made or who would feel their impact.

"We will continue to follow best practices. We will continue to restructure our Cabinet agencies," the governor said. "We will certainly slow the growth in a number of programs."

One of the forces driving the projected deficit is the mandate of a $1.3 billion public schools reform plan passed two years ago without a way to pay for it. Because of the failure to pass legislation on slots and taxes, Miller said yesterday that the so-called Thornton plan might have to be extended beyond its original schedule of six years as a way to balance the budget.

Miller suggested that Ehrlich and Busch meet soon to see if they can work out an agreement on issues that have kept them at loggerheads for two years. Otherwise, he said, prospects for progress in Annapolis are bleak.

"As a result of these two elephants in the jungle pounding on each other, everything in the jungle gets trampled," Miller said.

Sun staff writer Howard Libit contributed to this article.

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