Gov. Robert L. Ehrlich Jr.'s second session with the Maryland General Assembly is proving to be a test of his public popularity as well as his political acumen.

His $23.8 billion budget proposal for fiscal 2005, a 3.8 percent increase over fiscal 2004, is being criticized for its extensive use of short-term revenue items, as well as for its underfinancing of the Thornton Commission legislation for improving education around the state.

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  • Robert L. Ehrlich Jr. in brief

    Age: 46.

    Residence: Annapolis.

    Personal: Married to first lady Kendel Ehrlich, son Drew.

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The proposal, which does not call for increases in sales or income taxes, also includes an unprecedented $326 million for education, a $2.50 monthly sewage fee to upgrade wastewater treatment plants to help protect the Chesapeake Bay and $500,000 to begin work on the Inter-County Connector to link Interstates 95 and 270.

Still, the budget plan was criticized as "not structurally balanced" by the Maryland Department of Legislative Services because of its heavy reliance on $470 million one-time revenue sources and transfers, many of which would require General Assembly approval. About $149 million in cuts and $180 million in new revenues are expected to close the gap in the spending plan.

The governor revised his proposal for legalized slot machines last week to include terminals at two non-racetrack locations. Legislation introduced last session passed the Maryland Senate but died in the House, as Speaker Michael E. Busch, an Anne Arundel County Democrat, would not allow it out of subcommittee.

And in the first week of the session, General Assembly members overrode three of Ehrlich's vetoes -- along party lines -- the first such legislative action in 15 years.

On a snowy afternoon last week, Ehrlich -- while snacking on tea, cheese and crackers in the kitchen of the Governor's Mansion in Annapolis -- talked briefly about the issues facing his administration this General Assembly session.

Governor Ehrlich, your budget proposal calls for no general tax increase, but is being criticized for not addressing many of the longer-range issues facing the state. Are you comfortable with bringing forth such a plan?

We feel very comfortable. In fact, a lot of the reviews have been positive.

Why?

The structural deficit has been narrowed from $1.5 billion to $2 billion, depending on where you begin, to around $700 million in a year -- incredible progress.

We've cut over $1.2 billion. We continue to fund basic government services -- and, in fact, we've increased government services for priority programs.

Clearly, Medicaid, although it received an incredible increase this year, is a program out of control -- that's true with every state, by the way, not just Maryland -- but Medicaid received a $302 million increase this year. That's an unsustainable trendline.

We feel very good about the progress we've made on the structural deficit. We're returning fiscal discipline to the state. It's about time. It was part of the mandate from the election, and we're following through.

A lot of our major agencies have been restructured to perform, in many cases, more efficiently, with less personnel ...

... But your proposal is based on 15 revenue assumptions that have to be approved by the General Assembly?

Most of them are very minuscule amendments, obviously, and a couple, obviously, are simply outside the budget -- such as the water surcharge. Most are very small.

We're in a difficult situation, not just [with] respect to the budget, but also the national economy. We were in recession, and during recessions, tax revenues to local governments are diluted. In this case, there was a major diminution as a result of a very significant recession at the national level.

When you read about a structural deficit, that's a euphemism, for some, for a tax increase -- which we reject -- but the fact is that Medicaid -- which we can control, by the way -- will still increase, but in a more structured, sensible way, and Thornton. This remains the biggest issue on the horizon: How are you going to fund it and under what time frame?