Legislators stunned by projected deficits 'We're out of funds,' budget panel chief says


ANNAPOLIS -- With "running on empty" looming as an appropriate new Maryland motto, state legislators numbly absorbed yesterday another battering at the hands of the economy.

On the eve of a special one-day General Assembly session in which they are to ratify increases in motor vehicle fees, the newly formed joint Senate and House of Delegates Expenditure and Revenue Study Committee heard fiscal officers predict shortages of $299.3 million for a budget year that does not even begin until Monday, July 1.

And that was not the worst news.

When they convene in January for the 1992 legislative session, the General Assembly will face a deficit of $573 million for the 1993fiscal year unless the economy performs better than the state's economists now anticipate.

"I would like to say we will return to the heyday of the mid-1980s, but the probability is we won't," said William S. Ratchford II, director of the state's Department of Fiscal Services.

There was virtual silence in the Joint Legislative Hearing Room as the deficits were announced -- although one legislator guffawed as if still more deficits had to be a joke. State government has been caught recently in a nearly constant whirl of budget cuts amounting to hundreds of millions of dollars.

When they were told the state's $11 billion government will have the relatively paltry sum of $200,000 in the bank at the beginning of the next fiscal year, Sen. Lawrence Levitan, D-Montgomery, jokingly suggested buying lottery tickets in the hope of finding a partial bailout.

A spokeswoman for Gov. William Donald Schaefer said the legislature's projections are in line with those made by the administration's own analysts.

"We have been saying there would be shortfalls in the future and here they are," said Page Boinest, of the governor's press office. "Revenues are growing slowly, but the demands of the handicapped and unemployed and others keep going up. It's a real problem."

In the absence of a quick and robust economic recovery, the Assembly's dilemma is brutally clear, its leaders said yesterday as they began what one of them called "a long hot summer" of analysis.

"We either have to say we're not going to provide existing services or there have to be enhancements of the revenue stream," said Delegate Charles J. Ryan, D-Prince George's, chairman of the Appropriations Committee.

OC Mr. Ryan declined to use the words "new taxes," but others were

less restrained.

"We have to do something. We're out of funds," said Senator Levitan, chairman of the Committee on Budget and Taxation. During the last General Assembly session, the legislature raided every contingency fund -- rainy day, sunny day, open spaces land acquisition and many others.

Delegate Ryan and Senator Levitan continued their criticism of the Linowes commission yesterday, insisting that the commission appointed by Governor Schaefer and headed by Montgomery County lawyer and civic leader R. Robert Linowes had not sufficiently studied the spending side of the equation.

During the last Assembly session, a Linowes commission proposal to raise $800 million in new sales tax and income tax revenue was defeated partly because Assembly members felt they needed to study spending practices first.

It was that study that began yesterday.

Mr. Ratchford said the General Assembly had not taken a comprehensive look at spending and revenue-raising since the 1960s.

Since then, he said, the state's citizens have grown to expect much more from government: health care, environmental protections and housing assistance that were not part of state spending in the 1960s -- and all of which have grown quite costly.

At the completion of the legislative study that began here yesterday, a series of public hearings will be held so that Marylanders may see more clearly the choices, Mr. Ryan said.

"I'm not surprised at the deficit projections given the problems that have been clear for some time," said Delegate Ellen R. Sauerbrey, R-Baltimore County. "If revenues come in below annual spending, you retrench or this is where you are." Even a strong economic rebound might not help because of the problems which the Democrat-dominated Assembly and the Democratic governor have allowed to continue unaddressed, she said.

Delegate Sauerbrey said she is concerned that the legislature has not given itself enough time to study spending and may leave itself no choice but to raise taxes.

"I'm nervous that the result will be a justification for passing Linowes and calling it something else. A rose by any other name in this case will be skunk cabbage," she said.

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