Ellen R. Sauerbrey sees herself as the next Christine Todd Whitman, the New Jersey Republican who won an underdog race for governor by promising to cut taxes.
Mrs. Sauerbrey could be right. But if she wants to win votes,
Maryland's GOP nominee likely will have to explain how her tax cuts would affect government services.
As Ms. Whitman did a year ago, when she beat incumbent Democrat James J. Florio, Mrs. Sauerbrey has made tax relief the centerpiece of her campaign for governor against Democrat Parris N. Glendening.
Using Ms. Whitman's pledge to cut taxes 30 percent as a model, Mrs. Sauerbrey has promised to cut per- sonal income taxes in Maryland 6 percent the first year and 24 percent over four years. She says her plan would reduce income tax revenue by $820 million a year (out of what is now a $13.4 billion state budget).
And she has pledged that she would give up her $120,000 governor's salary if she fails.
Critics say her math might work, but that her plan won't. Except for the first year, they argue, she hasn't said what she would cut or by how much. They say essential government services would be hit hard by her proposed near-freeze on government spending and cuts in the state work force.
Del. Howard P. Rawlings, a Baltimore Democrat who is chairman the House Appropriations Committee, called it "Alice in Wonderland economics." Sen. Laurence Levitan, a Montgomery County Democrat and chairman of the Senate Budget and Taxation Committee, dismissed it as "ridiculous."
"If you want to get elected, it sounds good. But as a practical matter, it's not going to work," he said.
Mrs. Sauerbrey said Democrats lack the backbone and determination to make hard decisions. Even her critics agree she has a willingness to take on sacred cows.
She and her advisers have fashioned a plan that would benefit families and low-income residents in the first year. It would boost from $1,200 to $2,200 each personal exemption that a taxpayer claims, which would mean a tax reduction of $50 per exemption.
It also would eliminate the lowest tax bracket, 2 percent of the first $1,000 of taxable income, for a cut of $20 per return.
A family of four earning $30,000, for example, would see its individual state income tax drop from $1,000 to $780 in the first year and to $638 after the full 24 percent reduction was implemented. Some of the state's poorest taxpayers would be dropped from the tax rolls.
But Mrs. Sauerbrey has not said how the final three-quarters of her tax cut would be implemented or paid for, other than to say she wants to reduce the number of poor people eligible for welfare and Medicaid and continue reducing the state work force through attrition.
Echoing former President Ronald Reagan, one of her political idols, Mrs. Sauerbrey said a tax cut would stimulate Maryland's economy by attracting and retaining businesses and by giving individuals more money to spend.
"As an economist, I can say we will have a stimulating effect on the economy," said Stephen J. K. Walters, chairman of the economics department at Loyola College and one of Mrs. Sauerbrey's key advisers. "But we are assuming no multiplier [increase in revenue]. It is an extremely conservative approach to budgeting."
Mrs. Sauerbrey's critics say the plan might work in theory the first year but that it gradually would ruin Maryland's quality of life.
Rather than expecting the cost of government to grow at least at the rate of inflation, they say, Mrs. Sauerbrey would constrain most of next year's spending at this year's levels.
The candidate would not say which, if any, government services would be curtailed or eliminated as a result.
"I can't sit here today and tell you what [programs] they are," she said.
But she said there will be a test: Is it a legitimate function of government? Is it cost-effective? Is it affordable?
The Glendening camp is not so hesitant, suggesting that her cuts would result in higher college tuition, reductions in health services and the elimination of social programs.
They say life would become more dangerous for overburdened prison guards and more difficult for increasingly short-handed employees who care for Maryland's ill and needy.
'Real pain'
Over four years, Democrats say, the cumulative impact of the Sauerbrey cuts would be $2 billion.
"For the sake of a political gimmick, she's costing Marylanders real pain," said Emily Smith, Mr. Glendening's campaign manager.
Susan Leviton, a professor at the University of Maryland School of Law and founder of Advocates for Children and Youth, criticized Mrs. Sauerbrey's plan to reduce the size of the state work force by eliminating all currently vacant state jobs and 20 percent of newly vacant positions.
"That's not a rational way to cut government," Ms. Leviton said. "Just saying a position is vacant doesn't mean the position isn't needed."
In its budget preparations for next year, the outgoing Schaefer administration has assumed a 3.5 percent inflation rate, a 3 percent (or $55 million) cost-of-living raise for state workers and $20 million for annual longevity-pay increases.
Mrs. Sauerbrey includes the pay raise in her plan but would freeze spending at this year's levels in the departments of
Health, Human Resources, Juvenile Services, Higher Education, Agriculture, Natural Resources and Environment. Those departments also would be forced to absorb the $20 million cost of the pay increments -- meaning they would have to cut services to give their employees those raises.
And, although Mrs. Sauerbrey says she would eliminate parole for all violent offenders and require that they serve at least 85 percent of their sentences, she proposes only a 1 percent increase in spending on public safety and prisons.
To make her plan work, the increase in overall state spending would have to be held to 2.2 percent.
Administration and legislative budget analysts, legislators and advocates for the poor concede that such a plan may work for a year, but they say it couldn't be sustained. Fuel prices, building leases, travel costs and supply costs all go up, prisons become more crowded or new ones must open and be staffed, and hospital costs rise, they say.
"There is no way possible to achieve [Mrs. Sauerbrey's] fiscal goals," Mr. Rawlings said. "It is true deception to the public to make those kinds of proposals."
In New Jersey, Ms. Whitman paid for the portion of her tax cut that has been implemented largely by shifting employee pension costs to the future and by shifting the tax burden to local governments.
According to an analysis published last month in the Bergen County Record, the income tax reduction was wiped out by higher property taxes in 77 of 91 communities studied.
"It is entirely premature to look at New Jersey and suggest that the experiment there has worked, because half of the experiment hasn't been proposed yet," said Brian Roherty, executive director of the National Association of State Budget Officers. "And the half that has [been implemented] contains a number of proposals that simply moves money from the future back to the present."
Mrs. Sauerbrey has promised not to raid employee pension programs. She also says she will not tamper with scheduled increases in school aid or other financial assistance to local governments -- at least not in the first year.
Moreover, she says she will not shift the cost of state tax relief to Baltimore and the 23 counties. To prevent that, she is guaranteeing that local piggyback income tax receipts would not be reduced, even though the state income taxes on which they are now based would decrease.
Piggyback plan
To achieve that, piggyback taxes would have to be computed based on the current state tax rather than on the tax after it is reduced by the Sauerbrey plan. That means that citizens who believe they are paying at a piggyback tax rate of 50 percent will actually be paying at a higher rate.
Jim Duffy, a Washington-based Democratic consultant, said that politicians everywhere are seeing major corporations do more with less and that politicians of both parties are saying government, too, can cut back.
But to succeed, he said, politicians must be able to take the heat for the good-government programs that are cut in the process.
"If people decide this woman is not lying," he said of Mrs. Sauerbrey, "if she is straightforward, if she comes across as someone who is credible and unshakable in her faith in her idea, that's what the campaign is going to come down to."
ELLEN R. SAUERBREY'S TAX CUT PROPOSAL
The plan:
* Cut state personal income taxes by 24 percent over four years.
* Leave local piggyback income taxes at current levels.
* Revenue loss to state estimated at $205 million the first year (out of $3.4 billion in estimated income tax receipts). Total revenue loss over four years: $820 million.
* Mrs. Sauerbrey promises to forfeit her $120,000 governor's salary if unsuccessful in pushing through first year's 6 percent tax cut.
How taxes would change:
* In the first year, the personal exemption would increase from $1,200 to $2,200, a tax saving of $50 per exemption. The state's lowest tax bracket, 2 percent of the first $1,000 of taxable income, would be eliminated, a saving of $20 per tax return.
* In succeeding years, other tax brackets could be eliminated or restructured. The top rate could eventually fall from 5 percent to 4 percent.
* For a family of four earning $40,000 a year, overall state income taxes would be reduced from $1,500 to $1,280 in the first year and to $1,038 after four years.
How state would pay for it:
* Overall increase in state spending would be limited to 2.2 percent.
* Freeze spending by all agencies except public safety, which would increase by 1 percent. What services, if any, would be curtailed or eliminated is unspecified.
* Eliminate all currently vacant state jobs and 20 percent of all new vacancies.
* Aid to local governments, including aid for public schools, would increase by 5.5 percent.
* Spending on entitlements, such as Medicaid and public assistance, would increase by 5.2 percent, but welfare benefits would remain at current levels.
* Proposal would not raid employee pension funds or require layoffs and would include a $55 million, 3 percent cost-of-living raise for state workers. An additional $20 million for annual incremental pay increases would have to be absorbed by agencies themselves.
* An estimated $9 million in new revenue would be generated by allowing the state pension system to invest the $211 million in the state's "rainy day fund" at a higher rate of return than the rate now achieved by the state treasurer.
* Future changes uncertain, but reductions in welfare anMedicaid populations are likely targets, along with continued attrition of the state work force.