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Maryland's Micawbers Hope Things Will Get Better


It is a crisis without end. Five times in the past six months, legislators and the governor have made deep cuts in state spending to keep pace with tumbling revenues. Yet as soon as they clear out all the red ink, another vat of the dreadful stuff is discovered.

Things got so bad that when the General Assembly on Wednesday chopped another $125 million to balance the current year's budget, it did so for a mere four days. Tomorrow morning, when the new fiscal year begins, the state of Maryland once more becomes a debtor government, with a $109 million fund shortage.

From that point on, the financial picture gets downright scary: a $299 million deficit by this time next year, and a $573 million shortfall two years hence. To cover those kinds of whopping deficiencies would take an immediate one-cent increase in the sales tax (now at 5 cents) and an additional one-cent rise (to 7 cents) next July 1. Or put another way, the state would have to lay off 10,000 workers this December and another 10,000 by next July to close the gap.

Maryland politicians aren't likely to embrace a 40 percent hike in the sales tax by next spring. Nor are they likely to fire 20,000 state workers, all of whom have spouses and family members who would show their displeasure in the next election.

Legislators like to whittle away at fiscal problems. Or juggle reserve funds to make ends meet. Or simply cross their fingers and hope prosperity will soon reappear.

This last approach worked exceedingly well in the Reagan years. But legislators actually began to believe the Reagan myth that you could get something (good public services) for nothing (no new taxes). All it takes is an economic expansion that refuses to die.

But die it did, and now Maryland is caught in the trap Mr. Reagan left for public officials. The boom times have turned to recession. Tax revenues have shriveled. But those good public services of the 1980s now are soaking up much of the revenue still coming in. To make matters worse, mandated programs (Medicaid, welfare, prisons, aid to local schools) have insatiable appetites and now consume 60 percent of Maryland's general fund.

What's a governor to do? Mr. Schaefer asked the legislature to approve the Linowes commission's $1 billion tax-reform package. Less than $200 million of that total would have gone into the state's general-fund programs but it would have relieved the strain on local governments and made the state's financial bind less severe.

That approach got nowhere. Legislators still were in their "let's hope things get better on their own" mode. They whittled away at the budget gap to avoid inflicting pain. Finally, when all else failed, they raised $90 million in new taxes. When a new gap developed in May, they wiped out virtually all the state's reserve funds to ensure the constitutional requirement of a balanced budget.

Now legislators are out of options. There's nothing left to whittle at. Further cuts could pierce vital organs. There are no reserve funds left to tap, either. Even worse, lawmakers have pledged to lTC restore the money stripped from these accounts.

"We're borrowing against the future," Sen. John A. Cade of Anne Arundel County told his colleagues, "and we'll have to pay it back eventually."

Before then, legislators must correct what their fiscal adviser -- in a delightful bureaucratic description -- termed "a significant misalignment" of revenues and expenditures. In plain English: you guys are going to have to raise taxes and make painful choices on spending cuts so there's enough money to pay the bills on time.

Are legislators up to this task? Signs aren't encouraging. Lawmakers from Baltimore County, especially the Dundalk and Catonsville representatives, are terrified of the anti-tax movement. They'll do anything to avoid raising taxes, even if it means pretending the problem doesn't exist.

House Republicans believe the problem could be solved by cutting all that "waste" in government. They haven't given specifics.

No one in the Assembly wants anything to do with the Linowes recommendations, though the panel's work will serve as a guide for tax legislation.

And relations between the governor and legislators remain so fragile that anything Mr. Schaefer suggests on tax reform or program cuts is sure to run into a buzz saw of criticism from leaders still smarting from past gubernatorial insults.

One hope is that consensus will emerge this summer and fall as special legislative panels meet with administration officials to analyze the state's future needs and revenue outlook. Even then, it could be a hard sell. Legislators were spoiled during the Reagan years. They did get something for nothing -- or so they thought. Now they are coming face to face with the IOUs from those boom years. The political discomfort will be intense.

Barry Rascovar is deputy editor of the editorial pages of The Sun. His column on Maryland politics appears here each week.

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