Budget Year

WASHINGTON -- President Bush, seeking $245 billion more for the nation's two wars at a time when Congress is challenging an escalation of U.S. military force in Iraq, proposed a $2.9 trillion federal budget yesterday that would significantly increase defense spending while restraining other areas of the government. The president's plan for 2008 is much like the budgets he has presented for the past six years, averting new taxes and limiting spending in many "discretionary" areas while boosting defense spending.

The booming national economy and a rebounding local real estate market are expected to significantly increase Baltimore's tax collections and present an uncharacteristically rosy financial picture for the city this year, the chief budget analyst said yesterday.But some of the predicted $20 million surplus in revenue is being offset by overspending in several city departments.The Finance Department has ordered the Public Works, Recreation and Parks and Police departments to draft plans to curtail their spending.

Although a windfall insurance refund is helping Baltimore close a $31 million gap in its current budget year, the city's budget director is warning that the financial picture for the 1997 budget year, which begins July 1, has not improved.In a memo Friday, Budget Director Edward J. Gallagher told heads of city agencies that they should continue to plan to meet budget targets that include reductions ranging from several hundred thousand to several million dollars."Nothing has changed regarding budget actions to be taken by agencies," Mr. Gallagher said.

At last state governments are crawling out of that giganti budget hole created by the recession. While blue skies aren't yet on the fiscal horizon, the dark storm clouds of recent years are dissipating, providing states with enough economic good news to balance their budgets without too much belt-tightening this year."

ANNAPOLIS -- The Schaefer administration and the Maryland Association of Counties formally threw their support yesterday behind the House speaker's budget-balancing plan.The move could begin to break the General Assembly's deadlock on budget and tax issues.The plan put together by House Speaker R. Clayton Mitchell Jr., D-Kent, attempts to address a current budget year deficit estimated as high as $270 million. Its two most controversial provisions call for another $88.5 million reduction in state aid to Baltimore and the 23 counties, plus a temporary shift of $80 million from the state's Transportation Trust Fund to the general treasury.

It's almost "deja vu all over again" for Carroll budget officials, as estimates of the state's growing shortfall bring the promise of another summer of spending cuts on the county level.And although neither the state nor the county has made any decision on how to deal with what looks like a $240 million deficit for the budget year that began two weeks ago, the cut to Carroll could total as much as $5 million."That's certainly our worst-case scenario, but it is possible," said Steven D. Powell, the county's budget director.

Carroll County's budget deficit nearly doubled last week to $5.3 million, spurring immediate budget cutbacks, reduced work forces and, for the first time, talk of a possibility of layoffs."

WASHINGTON -- As he paces his government office in Augusta, Maine, John R. McKernan Jr. tries to imagine what will happen if four of his 20 staff members are laid off.He has a good reason for believing layoffs are likely. He's the one who will order them."These are horrible decisions," said the Republican governor, re-elected to a second term in November. "You'd never make them if you weren't required to; it's just human nature. People in government are there to help people, not hurt them."

As the County Council gets set for a final round of number-crunchingbefore adopting a budget, county department heads are braced for a lean year.A sluggish economy and declining revenues have lowered expectations considerably -- and apparently thinned the ranks of the annual parade of citizens and others lobbying the council in budget hearings for a bigger share of the government purse.In contrast to years past, when dozens of people turned out to plead for more county money in such specific budget areas as education,only 14 spoke at the second of two public hearings on the budget at Havre de Grace High School on Thursday night.

ANNAPOLIS -- Maryland ended fiscal year 1991 with enough money left over to finance the operations of state government for 2 1/2 minutes, Comptroller Louis L. Goldstein reported yesterday.The unappropriated surplus remaining once the books were officially closed on the budget year that ended June 30 was a measly $55,350 -- "smallest in memory," Mr. Goldstein said.The surplus is not even equal to half of Gov. William Donald Schaefer's annual $120,000 salary.According to Mr. Goldstein's spokesman, Marvin Bond, state government spends at a rate of $31.8 million a day, or $1.3 million an hour, $22,110 a minute, or $368 a second.

As the Maryland Transportation Authority's revenues have declined this year, its costs for construction of the Intercounty Connector have risen to the point where the project now accounts for 53 percent of the agency's budget - forcing delays in other road maintenance projects and making a substantial increase in tolls at some facilities a near certainty after the 2010 gubernatorial election. According to the state Department of Legislative Services, the independent toll authority is facing the same type of recession-related squeeze that has forced the Maryland Department of Transportation to defer about $2.2 billion in projects.

Gov. Martin O'Malley wants to balance next year's state budget by laying off 700 workers, slashing programs and relying on balance-sheet maneuvers. Facing a $2 billion shortfall, O'Malley proposed yesterday that the state's operating budget shrink by 1.3 percent, to $14.4 billion, which is the first year-to-year decrease offered by a governor in decades. With Congress debating a fiscal stimulus package, O'Malley also assumes that the state will receive $350 million in federal aid to help fill the gap in the budget year that begins in July.

A national economic meltdown has sucker-punched Maryland, according to state revenue numbers released yesterday portending major budget cuts in previously protected areas such as public safety, education and health care. A grim-faced Gov. Martin O'Malley issued an executive order requiring about 67,000 state workers to take up to five days of unpaid leave, and he said a projected $1.9 billion revenue gap in next year's budget could require state worker layoffs. O'Malley, a Democrat, said he and his budget officials were taken aback by the shortfalls in the state's income and sales tax revenues.

Mayor Sheila Dixon plans to announce today steep, across-the-board spending cuts - potentially hundreds of millions of dollars - as Baltimore confronts a worsening economy and prepares for expected reductions in state aid. Most Baltimore agencies would have to cut spending by more than 12 percent in the next budget year, according to union officials and others who have been briefed on the plan. Police and fire budgets would be cut by about 5 percent. The cuts could reduce the city's $2.1 billion budget by as much as $200 million.

WASHINGTON -- President Bush, seeking $245 billion more for the nation's two wars at a time when Congress is challenging an escalation of U.S. military force in Iraq, proposed a $2.9 trillion federal budget yesterday that would significantly increase defense spending while restraining other areas of the government. The president's plan for 2008 is much like the budgets he has presented for the past six years, averting new taxes and limiting spending in many "discretionary" areas while boosting defense spending.

Maryland tax collectors are taking in money at a pace far greater than expected just weeks ago, creating a financial cushion that will help pay for daunting education, health care and other budget needs during the next two years. Payments with income tax returns came in at $210 million more than anticipated last month, Comptroller William Donald Schaefer announced yesterday. Other tax collections also were higher, and the state has received $250 million more for its $11 billion general fund budget than expected in March, the last time projections were revised, Schaefer said.

Gov. Robert L. Ehrlich Jr. offered a glowing account of Maryland's finances during his State of the State address yesterday, saying the state would end the current budget year in June with a $680 million surplus. Since he took office, the governor boasted, "we have resolved a $4 billion - four, with a b, billion dollars - in shortfalls." But the numbers Ehrlich plucked for his speech offer only a partial - and somewhat misleading - view of Maryland's fiscal outlook, lawmakers and legislative analysts said.

The state plans to spend more than $110 million over the next five years to replace Baltimore's dilapidated women's detention center and to build a new jail for juvenile offenders now housed with adults, the governor's office said yesterday. Gov. Robert L. Ehrlich Jr.'s capital budget outlines plans for a $66.5 million, 800-bed women's jail to take the place of a facility that has been criticized for rampant problems, including poor ventilation and a faulty sewage system. The 200-bed jail for offenders under 18, expected to cost $51 million, will be for youths charged as adults and awaiting trial.

Maryland tax revenues dropped $76 million below what had been expected during the past three months, adding to the frustration of lawmakers who walked away from an update on the state's finances yesterday with little fresh information on how Gov. Robert L. Ehrlich Jr. plans to handle the fiscal crisis. News of the decline in sales and income taxes from previous estimates - a drop of about 1.1 percent in the general fund revenues used to pay most state services - provided some of the few concrete facts House and Senate budget writers could digest during a lengthy briefing that grew heated at times.

Even as his administration plunges forward with a plan to cut hundreds of millions of dollars from the state budget, Gov. Robert L. Ehrlich Jr. said yesterday that the initial pain may not be as severe as some are expecting. "The first round here may not be as dramatic as people think," Ehrlich said. The governor said he and his budget secretary continue to review cost-cutting proposals submitted by agencies. While Ehrlich had previously said he hoped each department comes up with a 7.5 percent reduction in the budget year that begins July 1 - for a total savings of up to $500 million - some of those numbers have been changing.