State faces more red ink Further budget cutting expected


Maryland is sinking further into red ink as new calculations place the state's budget deficit as high as $270 million. Officials blame a faltering economy for the growing deficit, which less than a month ago was estimated to be about $150 million.

"The situation has deteriorated considerably since our last assessment," said Charles L. Benton Jr., Maryland budget secretary.

The new deficit projections come even as Gov. William Donald Schaefer is struggling to make final decisions on cuts to bring the current budget back into balance, cuts that are dealing with only the earlier deficit projections.

"We may have the distasteful job of going back and looking over further reductions, which will be very serious," Benton said.

Benton said outside economists are predicting the state will take in between $100 million and $180 million less than expected during the fiscal year that ends next June 30. Economists had earlier predicted a shortfall of about $60 million, mainly in lower than expected sales tax revenues.

The Department of Fiscal Services, which advises the legislature, is now estimating that the revenue shortfall will reach about $150 million, according to officials.

On the equally gloomy spending side, Schaefer last month disclosed that several state programs will cost an estimated $89 million more than budgeted, bringing the total potential deficit up to about $270 million.

Unanticipated spending on welfare and Medicaid will reach a total of $58 million, according to the estimates.

Benton said the governor and legislature will have to either cut the budget or raise taxes or other revenues to finish the year with a balanced budget.

Schaefer has already ordered agencies and departments to cut their budgets between 1 and 6 percent, depending on their size. One casualty of the budget crunch is likely to be $39 million in "enhancements" for the University of Maryland system. Cutting the budget further will be hard, he said, because much of the state's spending is mandated by law.

"A lot of things you just can't touch," Benton said.

But, Benton added, "Talk about taxation and the need for revenues is pretty much verboten this time of the year," as the election nears.

Del. Charles J. Ryan, chairman of the House Appropriations Committtee, downplayed the new deficit projections. "I don't consider it that big a difference," said Ryan, D-Prince George's.

Ryan added, "It'll be just that much harder to cut."

Ryan said continuing bad economic statistics were helping drive the deficit projections up. In particular, Ryan said, the economy in the suburbs of Washington, D.C., is sluggish as consumers are worrying about being laid off from federal jobs.

Benton noted that 23 states, including Maryland and Virginia, have had to enact emergency budget changes in the last six months to cope with the slumping economy.

The current deficit is the first of Schaefer's four-year term. Two years ago, the state enjoyed a surplus of about $400 million. Over the governor's objections, the legislature enacted a modest $40 million tax-relief plan that returned about $15 to each taxpayer on average. Much of the rest of that surplus was spent on one-time construction projects.

Benton said he hopes by next week to have final decisions from Schaefer on what may be only the first round of budget cuts. He hopes to finish all budget action quickly, to spread the cuts out over as much of the remaining eight months of the fiscal year as possible.

"The longer you put this off, the harder it is to do it," Benton said.

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