Maybe the State Can Live Without New Taxes


Havre de Grace -- Believe it or not, the Annapolis tax train may have gone off the rails.

Six weeks ago, hardly anyone anticipated that. When this year's session of the Maryland General Assembly convened in January, it was generally assumed that Gov. William Donald Schaefer would get a huge tax increase of some sort in spite of the ham-handed way in which he went after it.

That this would be right and proper, as well as inevitable, was a view espoused by many influential legislators, including Senate president Mike Miller and Senator Laurence Levitan of Montgomery County, a putative expert on budget matters. Joining in were the public-education lobby, state public-employee unions, a selection of city and suburban politicians, and various print and broadcast editorialists.

Their position was, essentially, that Maryland's state government must have more money or die; that all possible cuts have now been agreed upon; that further reductions in spending would be irresponsible, if not immoral; and that the time has come for all good Marylanders to pay more taxes. Those who took another view were dismissed derisively as "the no-new-taxes crowd," and their opposition was expected to collapse ignominiously.

But the opposition hasn't collapsed. It has found new allies, developed new sources of information, and grown politically stronger and intellectually more respectable. As a result, right now, a state budget for fiscal 1993 containing no new broad-based taxes (except for a thumping 27 percent increase in the state tax on gasoline, to be used for transportation projects) remains a distinct possibility.

A number of people deserve credit for this, notably House Speaker Clayton Mitchell and House minority leader Ellen Sauerbrey. These two, though members of different parties and operating independently, have argued persuasively that a no-tax-increase budget does not have to mean the doomsday collapse of vital services threatened by Mr. Schaefer.

In so arguing, they have made it acceptable for a member of the House of Delegates to be publicly anti-tax and have reinvigorated the taxpaying public by giving it new hope that the democratic process really can work in Annapolis.

Working closely with anti-tax legislators from both sides of the aisle has been Tom Schmidt, the state budget secretary under Gov. Harry Hughes. Mr. Schmidt, who retired in 1983, was highly regarded by legislators and legislative staff in his day, and his soft-spoken views today command respect even among those who disagree with them.

Mr. Schmidt's position, which he supports with a detailed budget analysis, is that the 1993 budget can be balanced without a tax increase and without major disruption of state services, though probably not without some pain and inconvenience. It would have been much easier, however, he points out, if the state had begun to respond to the recession when the first red flags began going up two or more years ago.

(Mr. Schaefer's initial responses, you may recall, were first to deny that there was any problem at all and then, petulantly, to propose firing MedEvac pilots and police officers as budget-balancing steps. Following that he used various gimmicks, rather than structural reform, to balance the 1991 and -- he thought -- the 1992 budgets.)

Basically, the 1993 budget submitted by Mr. Schaefer would be $480 million in the red without any new taxes. To cover that deficit and provide a $63 million cushion, the governor has proposed a $543.7 million tax package. His budget includes $129 million for increases in salaries and wages. He proposes to abolish 500 of the 4,500 vacant state jobs -- and add 1,100 new ones. This is management?

Mr. Schmidt and the House Republicans propose instead that in addition to the 500 vacant jobs Mr. Schaefer would eliminate, 1,000 more be abolished, for a total of 1,500. And no new ones would be added.

Speaker Mitchell has another approach. He backs a "consolidated manpower plan," which would place a limit on the number of employees each department could have. Departments could shift employees around, but could not exceed that statutory limit. In addition, as jobs became vacant, only half of them could be refilled without specific authorization.

The various no-new-tax alternatives to Mr. Schaefer's budget offer plenty of cost-containment options to the legislature, and in very few instances -- a point constantly overlooked in this debate -- do they call for true "cuts." Cuts, firings and furloughs shouldn't be required. What's needed are realistic reductions in the increases being sought by the administration.

A legitimately trimmed-back fiscal '93 budget, which almost by definition is one which doesn't require a tax increase to balance, would offer a long-term political benefit, too. Because each year's budget is a product of its predecessor, restraint in fiscal '93 would lower the baseline and make it much easier to enact an affordable budget for fiscal '94. And 1994, as Annapolis well knows, is an election year.

Obviously, the unpopularity of Mr. Schaefer has helped the anti-tax movement. Since his re-election, the governor has been a lame duck; politically he's now become a dead one. (The recent suggestion he floated that he might run for mayor of Baltimore again was a pathetic effort to restore some of his lost credibility.) For a legislator, being disliked by the governor, once a serious handicap, is now a badge of honor.

Glimmering before the legislature right now, for the growing number with the wit to see it, is a great opportunity. A no-new-taxes budget for 1993 would demonstrate that state government is back under control. It would also set the stage for the return to Maryland of economic vitality, a healthy growth in state revenues and services, and -- who knows? -- maybe even tax reduction too.

Peter Jay's column appears here each Sunday.

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