Painful State House Decisions


For General Assembly budget leaders, the next six weeks could be excruciating. As Maryland's deficit widens, the options available to balance the budget -- as required by the state constitution -- become increasingly distasteful. Every possible avenue offering fiscal relief must be pursued.

That includes major tax increases and Draconian spending cuts. These are the two extremes on the government's budget pendulum. Legislators would rather avoid both options. But Maryland's fiscal outlook is so bleak that a combination of new taxes and sweeping program cuts might be unavoidable. Assembly leaders could wind up with the worst of both worlds.

The Schaefer administration's $11.6 billion budget has some shaky underpinnings: overly optimistic revenue projections, a shift of transportation taxes into the general fund and a flim-flam involving federal Medicaid contributions. If legislators are serious about purifying the Schaefer budget of these gimmicks, they may have to come up with as much as $300 million in additional taxes and spending cuts to avoid a deficit.

Lt. Gov. Melvin A. Steinberg offers a ray of hope in pushing for an "interim" tax plan that would raise $200 million. He wants to take the most palatable features of the Linowes commission on tax reform and sell the legislature on them. That won't be easy. Too many lawmakers -- especially House Speaker R. Clayton Mitchell -- refuse to abandon their "no new taxes" vows, even as the state's fiscal picture deteriorates.

More pragmatic legislators favor another tack: Raising taxes on tobacco, telecommunications and ending sales-tax exemptions for certain items. This would generate $74 million. Broadening the sales tax to include other services could increase that amount considerably.

Also gaining support is a plan to cut over $200 million from state programs, state colleges and local aid packages. One vulnerable area is school aid. Legislators are infuriated that school boards want to use state funds to raise teachers' salaries -- even as the state is forced to deny pay increases to its own employees.

Layoffs and furloughs could be imminent. The governor may have to act immediately to trim costs after the Board of Revenue Estimates releases its latest downward revisions on Feb. 25. If the economy continues to weaken, the governor may be forced to make further cuts next month, too.

General Assembly leaders, meanwhile, have to examine a broad array of alternatives, including bare-bones programs, four-day work weeks, a heavier tax burden for the state's richest citizens, a higher gasoline tax and a more uniform sales tax. No matter what legislators do, constituents are sure to complain. Coming up with an approach that minimizes the pain will be the General Assembly's greatest challenge.

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