Assembly approves fiscal '07 budget

$29.4 billion plan, fueled by real estate market, marks 11.4% rise over 2006

General Assembly


The General Assembly approved a $29.4 billion spending plan for the coming fiscal year yesterday, providing money to freeze tuition at state universities, boost the pay of corrections workers, fund stem cell research and sweeten state employee pensions.

The budget, which takes effect July 1, represents a remarkable turnaround for state finances since the beginning of Gov. Robert L. Ehrlich Jr.'s term in 2003, when deep projected deficits forced spending cuts, fee increases and a rise in the property tax. Now, thanks to a hot economy and real estate market, spending is set to grow 11.4 percent over this year, the fastest rate of increase in at least a quarter-century, while still leaving the state government with $870 million to help balance next year's budget.

But even as they trumpeted their successes in helping the state's college students, public employees, Medicaid recipients and others, lawmakers cautioned that the current fiscal sunshine belies cloudy days ahead. House and Senate fiscal leaders project that current surpluses will quickly turn to deficits again.

"This budget is more than balanced but less than perfect to maintain ongoing spending with existing revenues," said Sen. Ulysses Currie, the Prince George's County Democrat who chairs the Budget and Taxation Committee.

Del. Anthony J. O'Donnell, the minority whip from Southern Maryland and a member of the Appropriations Committee, said the relatively modest nature of changes made by the legislature in Ehrlich's budget proposal are a testament to the prudence of the governor's priorities.

"It's a well-balanced plan," O'Donnell said. "He kept his commitment to fully fund K-12 education, historic investments in cleaning up the Chesapeake Bay, transportation projects that have been stymied and stifled under the preview administration going forward, all without a significant increase in taxes."

The budget includes no changes to sales or income taxes. Ehrlich has proposed eliminating part of the increase in property taxes he approved three years ago, but that plan requires approval by the Board of Public Works. The two Democrats on the board, Comptroller William Donald Schaefer and Treasurer Nancy K. Kopp, have said they oppose the cut because of the state's uncertain fiscal future.

Yesterday's plan reflects a consensus reached over the weekend by a negotiating committee of delegates and senators. Budget negotiations this year were unusually short and completed early - the deadline for the budget's passage is not until Monday - in part, legislators said, because the lack of a need for deep cuts made agreement easier.

Still, legislators did cut Ehrlich's budget proposal, which he augmented twice with supplemental spending plans. In all, legislators cut about $179 million from Ehrlich's budget, saying the reductions were necessary to keep state spending from growing faster than the state's economy.

Legislators cut $10.7 million from the state's economic development assistance fund; $10 million for horse racing purse enhancements; $12 million for a stem cell research center at the University of Maryland; $5 million in operating funding for stem cell research; $2 million for need-based scholarships for university students; and $1.1 million in incentives for filmmakers to work in Maryland.

In many instances, budget negotiators said they targeted programs that did not spend all of their allocations last year or, as in the case of stem cell research, in which they did not believe all of the governor's allocation could be spent in the coming year.

The Senate voted 43-2 in favor of the bill, with two Republicans, Sen. Andrew P. Harris of Baltimore County and Sen. Alex X. Mooney of Frederick County, opposing.

Harris, a social conservative who opposes embryonic stem cell research, said the inclusion of $15 million for the science, $5 million more than Senate negotiators had wanted, was too much for him to stomach. In general, he said he was troubled by the rapid spending growth.

"I'm constantly amazed," he said. "When I came here, the budget was $15 billion. Now it's twice that. It looks like we have too much money to spend."

The House voted 131-5 in support of the budget. Some Republicans there also opposed it out of concern that spending is growing too fast.

"We really need to be mindful that we don't spend ourselves into the point of hurting our economy and hurting our citizens," said Del. John G. Truschler, a Republican from Baltimore County.

O'Donnell said criticism that the governor is spending too fast is just "political spin." Most of the spending increase, he said, is mandatory, the result of programs such as the landmark education funding plan the legislature enacted the year before Ehrlich took office.

Sun reporter Kelly Brewington contributed to this article.

Budget highlights

Here are some key provisions of the state budget approved by the House and Senate.

No new taxes or tax cuts.

Freezes tuition at state colleges for one year.

2 percent average raise for most state workers, 11.3 percent for correctional officers.

Saves $870 million to help balance future budgets.

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