Scaring up new revenue

`Doomsday budget' shows need for taxes or slots, Md. leaders say

June 28, 2007|By Gady A. Epstein | Gady A. Epstein,Sun Reporter

In an exercise of political theater intended to set the stage for tax increases and possibly slot machines, legislators got a grim look yesterday at how the state could balance the budget with spending cuts alone.

The "doomsday budget" - ordered up by legislative leaders to make the case that Maryland's expected $1.5 billion shortfall requires revenue increases - would cut state funding for public education by $500 million.

It would cut grants for police officers, force tuition increases at state universities, freeze state workers' salaries, eliminate hundreds of state jobs and close some state institutions, including the Walter P. Carter Center, a psychiatric hospital in Baltimore.

This worst-case scenario would remove the annual increase built into the state's landmark education funding initiative known as the Thornton formula, and force local governments to pay half of teacher retirement costs.

Baltimore schools would lose $43.2 million under this scenario, Baltimore County schools would lose $58.9 million and Anne Arundel County's would lose $42.8 million.

"The reality is, this is very frightening," said Del. Melvin L. Stukes, a Baltimore Democrat and member of the House Ways and Means Committee, one of three legislative panels that convened jointly yesterday to consider the cuts.

Maryland's top political leaders agree that the doomsday budget will not come to pass, as each intends to push a variety of revenue-increasing options, ranging from a penny increase in the sales tax to an increase in the gas tax to allowing slot machines at race tracks.

Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch instructed their aides to devise the budget anyway, to illustrate the pain of addressing an expected shortfall with cuts and no revenue increases. Gov. Martin O'Malley has said repeatedly in recent days that he wants to avoid making deep cuts to local government funding.

But at yesterday's joint hearing, legislators jousted with one another and staff as if the cuts were real. At times, it seemed the only person talking who remembered that this was a political exercise was the man tasked with executing it, Warren G. Deschenaux, the General Assembly's chief fiscal analyst. The longtime staff member sometimes responded to questions with curt replies or jokes.

Other imaginary cuts in the doomsday budget included a cut in stem cell research funding by $8 million, to $15 million a year; elimination of the biotechnology tax credit and the state's subsidy for the Baltimore Convention Center, and reduced spending for higher education.

But it was the list of cuts in aid to local governments, compiled in a guaranteed-to-shock chart format, that prompted the most sniping. Some legislators suggested that wealthy Montgomery County might easily be able to "suck up" the proposed $155 million cut in state aid to that jurisdiction, but other counties couldn't or wouldn't.

Deschenaux said many jurisdictions, including Montgomery, have sizable budget surpluses that could offset the cuts, or they could increase local property taxes or make other decisions "to deal with that problem, should it become a problem."

Sen. Ulysses Currie, chairman of the Budget and Taxation Committee, called it a "mistake" to include cuts to local government funding in the doomsday budget.

"It could end up dividing us," the Prince George's Democrat said. "What we need is Baltimore City working with Montgomery County, and Montgomery County working with the state, various jurisdictions working together."

Busch said it's impossible to make so many cuts without affecting local governments - and that was one of the points of yesterday's demonstration.

"The benefit of this is for people to see what the alternative is without revenues," Busch said.

It was also a reminder of the simplest equation of budget politics: Just as a surplus is an opportunity for every legislator to push a favorite program, a deficit pushes every legislator to defend favorites from elimination.

"Everybody has their own program," said Montgomery County Democrat Sheila E. Hixson, chair of the House Ways and Means Committee. "You know that they're going to fight to keep that, and if we do that, you're going to increase taxes."

Some Republican legislators suggested that recent state spending increases have produced the current budget crisis, and they have previously proposed deep spending cuts instead of tax increases.

But O'Malley and legislative leaders have made it clear that some method of increasing revenue is looming. The governor reiterated that point yesterday.

"We didn't feel, given our sense of the public's priorities, that this deficit could be solved without new revenue," O'Malley said.

gady.epstein@baltsun.com

Sun reporter Andrew A. Green contributed to this article.

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