Spending Cuts

The House of Delegates recommended yesterday $500 million in specific spending cuts for Gov. Martin O'Malley's next budget, paving the way for negotiations later this week with the state Senate, which recommended the same amount of cuts but left the details to the governor. Although the measure passed by a vote of 103-36, some lawmakers questioned the necessity of recommending the cuts when, by Maryland law, the governor has responsibility for developing the state budget. O'Malley will release his budget in January, and lawmakers can then make spending cuts.

IN EARLY July, President Clinton visited some of the poorest regions of the country and, to bipartisan acclaim, spoke eloquently of our obligations to America's most disadvantaged children. Now, with the U.S. economy performing at its peak, we have an unprecedented opportunity to back up our words with actions.As Congress begins making critical decisions on budget priorities for decades to come, there is no better time than now to demonstrate the depth of our commitment to America's children, especially the poorest among them.

TO THE DISMAY of Jack Kemp and other tax-cut myopes in the Republican Party, Speaker Newt Gingrich has emerged as the unlikely leader in an effort to put sanity into the balanced-budget debate. By proposing that any tax cuts be postponed until after Congress adopts a plan to wipe out deficit spending by 2002, Mr. Gingrich has opened the door for some serious legislating after Congress returns from its Easter holiday.His key ally in this endeavor is House Budget Committee chairman John Kasich, who could emerge as a strong rival to Mr. Kemp in a race that has already begun for the next GOP presidential nomination.

WASHINGTON -- Reacting to signs that Republicans may be willing to delay tax cuts, President Clinton yesterday invited congressional leaders to the White House to try to restart negotiations toward a balanced budget."

Good news from Washington:The federal deficit is smaller than expected -- about $23 billion in the year that ended last month. Next year, if the economy remains strong, there may even be a surplus.Why does it matter? Because when the government spends more than it collects in taxes, it has to borrow the difference. When it borrows, it competes for money with families borrowing for new homes and with businesses borrowing to expand. The competition for money raises interest rates, increasing the cost of borrowing for everyone.

With an unusual display of bipartisanship, the House of Delegates overwhelmingly approved a $15.3 billion budget bill that shaves $85 million from Gov. Parris N. Glendening's spending plan and leaves room for the first stage of a 7 percent income tax cut."This is a budget that is both socially responsible and fiscally XTC prudent," said Del. Howard P. Rawlings, the Baltimore Democrat who chairs the Appropriations Committee, before the 128-10 vote.The bill, which envisions no new taxes, received the support of every Democrat who voted and three-fourths of the 41-member Republican caucus.

In a move one delegate described as a "role reversal," Republicans in the House of Delegates proposed a populist version of an income tax cut yesterday that they say would put more money into the pockets of middle-class voters than Gov. Parris N. Glendening's plan.The proposal, which would not meet Glendening's goal of lowering the overall income tax rate, was the top item on the House Republican caucus' annual legislative agenda. Much of that agenda is annually tossed onto the legislative scrapheap by the General Assembly's strong Democratic majority.

To close a shortfall caused by slumping tax revenues, state officials yesterday announced $26 million in spending cuts from this year's budget, including the elimination of 144 state government jobs.The plan, approved by Gov. Parris N. Glendening and Comptroller Louis L. Goldstein, generates a significant portion of its savings simply by implementing promised cuts earlier than previously planned.Some state employees who have already received a July 1 layoff notice will be told to leave their posts by May 1 instead.

Tax rates are not going up next year in Howard County, but it's likely to be more expensive to live there.That's because the local government is proposing charging higher fees for services such as trash pickup and recreational activities, as illustrated last night during another hearing on County Executive Charles I. Ecker's proposed $336.5 million operating budget for the fiscal year that begins July 1."A class will cost you more. A pavilion rental will cost you more. A hot dog will cost you more," said Jeffrey Bourne, director of the Howard County Department of Recreation and Parks, describing proposed increased fees for his department.

THERE THEY GO AGAIN. After quadrupling the national debt in the Reagan-Bush years and after seeing candidate-of-choice Steve Forbes blow it in the 1996 Republican primaries, the supply-sider crowd is now trying to capture their old nemesis, Sen. Bob Dole.For a price, supply-siders are even willing to forgive Mr. Dole's long, quiet efforts to ease the damage of the Reagan tax cuts by adhering to balance-the-budget, cut-the-deficit economics. All they want is that he resurrect Reaganomics by embracing a 15 percent, across-the-board cut in tax rates that would add $90 billion a year to the deficit.

Maryland's ability to provide education, health services, community safety and help for the most vulnerable is in danger. Recent economic statistics suggest the national recession is at an end. This is certainly good news. But when it comes to Maryland and other states meeting the growing demand for public services, it's not as good as you might think. In the last four recessions, it took three to six years for Maryland state revenues to return to their peak. And this recession has been worse than the average.

Sen. John McCain likes to compare his Democratic opponent Sen. Barack Obama to Herbert Hoover, the conservative Republican president whose tax hikes and restrictive trade policies have been blamed for deepening America's Great Depression in the early 1930s. But a closer look at Mr. McCain's economic proposals -- aiming to reduce the deficit and cut government spending in the midst of a serious financial crisis -- make him sound more like Mr. Hoover. Senator Obama's proposals to seek more public spending to reverse the current economic decline are more reminiscent of President Franklin Delano Roosevelt, the honored warrior against the Great Depression.

As the November referendum on slots nears, Maryland voters can expect a barrage of warnings from proponents about what a "no" vote could mean: cuts to public education and health care, higher taxes and the demise of the state's horse racing legacy. In recent years, though, voters in other states have rejected gambling initiatives sold as cure-alls for fiscal ailments, and the consequences have not been catastrophic, according to officials in Ohio, Nebraska, Rhode Island and elsewhere. Moreover, analysts and budget experts in Maryland caution that approving 15,000 slot machines here will not preclude the need for major spending cuts in coming months because of faltering economic conditions in the state and nation.

Maryland officials voted yesterday to cut the state's budget by $50 million, a move that affected nearly every state agency and included reductions in aid to private universities and funding for cancer research. The General Assembly ordered the spending cuts during the spring legislative session to make up for revenue lost by the repeal of a tax on computer services. But officials warned that yesterday's action by the Board of Public Works could be a harbinger of more belt-tightening in the coming months if the national economy continues to stall.

CAMBRIDGE -- Gov. Martin O'Malley played down the prospect of more major slashes in "big-ticket" public programs, saying last night that the next round of spending cuts required to balance the state budget will probably come from finding "efficiencies" in an array of government operations. "I think we're going to be sore-pressed to find one or two cuts that add up to $200 million," said O'Malley, a Democrat, after speaking to local elected officials and government workers at the Maryland Association of Counties winter conference.

The House of Delegates recommended yesterday $500 million in specific spending cuts for Gov. Martin O'Malley's next budget, paving the way for negotiations later this week with the state Senate, which recommended the same amount of cuts but left the details to the governor. Although the measure passed by a vote of 103-36, some lawmakers questioned the necessity of recommending the cuts when, by Maryland law, the governor has responsibility for developing the state budget. O'Malley will release his budget in January, and lawmakers can then make spending cuts.

Some Maryland delegates voiced skepticism yesterday about proposals for cutting at least $500 million in projected state spending as part of a comprehensive package to close the $1.7 billion fiscal shortfall expected next year. And dozens of groups that oppose the proposed cuts - interests ranging from higher education to the film industry - sought to convey the effect of each suggested reduction, whether it be economic hardship, tuition increases or even a possible cure for painful diseases.

With all due respect to those upset with the $213 million in spending reductions approved yesterday by the state Board of Public Works, let's keep some perspective. As trims go, this is just a little off the top. On a percentage basis, the reductions amount to less than 1.5 percent of general fund spending. That's not hardship; it's a start. Not that these budget decisions are without consequence, but the state's looming $1.5 billion deficit means difficult choices must be made. That's why it's more than a little disappointing that Gov. Martin O'Malley hasn't truly unleashed his inner bean counter.

Gov. Martin O'Malley ordered his Cabinet secretaries yesterday to find spending cuts totaling $200 million, saying reductions in services and even layoffs of state workers might be necessary to begin addressing the state's impending fiscal crisis. If the cuts are realized, though, they would make but a small dent in next year's budget shortfall, which is expected to be as much as $1.5 billion. But O'Malley said the cuts - about 2.5 percent of the general fund - may not be the last ones he makes and will lower the amount he will be forced to seek from new revenue sources, such as higher taxes and slot machine gambling.

WASHINGTON -- Racing to adjourn for the year, the House was poised to pass a final package of budget cuts early this morning and was expected to consider other key legislation before sunrise. After lengthy negotiations over the weekend, lawmakers reached deals on several measures, including the spending cuts - worth $41.6 billion over five years - and defense spending that included a provision to allow oil drilling in Alaska's Arctic National Wildlife Refuge. The Senate is expected to vote on the measures this week.