State's economy lifeless and more cuts are likely, county officials told


OCEAN CITY -- County officials were told yesterday that Maryland's economy is lifeless and the state once again will be forced to cut its support for local services.

State Comptroller Louis L. Goldstein and legislative budget adviser William S. Ratchford II delivered the painful lesson in the obvious to a standing-room-only audience at the 42nd annual meeting of the Maryland Association of Counties. They said the state's economy is stuck in the doldrums with no favorable breeze in sight.

"Obviously, this will mean some curtailment in state aid, possibly on a permanent basis," said Mr. Ratchford, director of the General Assembly's Department of Fiscal Services.

County officials are now awaiting the grim details.

"What's next? I think we know," said Matthew E. Creamer, Wicomico County's administrator. "We just don't know how bad or how much."

Gov. William Donald Schaefer is expected to answer some of those questions in a speech at today's closing session.

Yesterday, the governor said only that he is working on "the basic premise there will be no new taxes," aware that legislative leaders have all but ruled them out. Unless the economy suddenly improves -- which no one here is predicting -- the state would face a deficit estimated anywhere from $250 million to a half-billion dollars that would have to be eliminated exclusively through cuts in spending.

The deficit is mainly attributed to lower-than-estimated tax collections, a condition that appears chronic.

"There is nothing on the horizon that points to a revival of growth in the sales or income tax revenue," Mr. Goldstein said. "For the first time in my memory, I don't believe the nation will see the spurt of economic activity that generaly follows a national election, unless changes are made at all levels of government."

To achieve the size of reductions needed to erase such a large deficit, the General Assembly will have to act. Without legislative approval, Mr. Schaefer cannot unilaterally reduce many appropriations more than 25 percent, and cannot touch the huge state allotment for education or expensive entitlement programs because they are mandated by law.

Senate Minority Leader John A. Cade, R-Anne Arundel, said he believed a special session before Christmas was "inevitable." Mr. Cade, a member of the Senate budget committee and one of the few legislative leaders present yesterday, also said he feared aid for schools was at risk.

Other legislative leaders, including House Speaker R. Clayton Mitchell Jr., D-Kent, are believed to be dead set against bringing the legislature into special session for the fourth time in two years.

Whatever state officials do, county officials want them to do it quickly. Counties do not want to be forced to make deep spending reductions late in the budget year.

"We're willing to take our fair share," said Charles County Commissioner Murray Levy. But counties want and deserve "advance notice," he said.

Anne Arundel County Executive Robert Neall asked Mr. Schaefer to bring together "some of the best minds in Maryland" to analyze the fiscal relationships between the state and its 24 major subdivisions and suggest long-range changes. If such a group could make recommendations for the fiscal year that begins next July 1, counties would have up to 18 months to adjust, he said.

Mr. Goldstein tried to dispel any lingering doubts about the seriousness of the situation or the threat to state aid to the counties.

"That gravy train is coming to a halt," he warned.

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