Maryland now has a quarter-billion-dollar fire wall in place to protect this state should the local economy turn sour or should Washington hand Annapolis some expensive new obligations. Both Gov. Parris N. Glendening and legislative leaders acted with extreme caution in their budgeting. That's good news for state taxpayers.
This responsible approach puts Maryland in a safe position to react to whatever happens on Capitol Hill. Worst-case estimates place this state's potential losses in any revamping of federal aid programs at $200 million. Now there is money sitting in a reserve fund to handle that contingency.
And if the worst doesn't happen? Then the governor has a big installment on a 1996 income-tax cut. We could wind up with the best of both worlds: Fiscal safety this year and lower personal taxes next year.
Mr. Glendening took another important step in this year's budget, too. He cut $235 million out of the budget submitted by his predecessor. This brought Maryland's spending into line with incoming revenue. Shrinking state spending is essential to erasing a long-term structural imbalance that threatens Maryland's fiscal future.
Additionally, the state has achieved a long-sought goal of setting aside 5 percent of its general fund operating budget in an account that can be used only in the event of an economic "rainy day." This complies with recommendations of New York financial houses and should help Maryland retain its coveted (and cost-saving) triple-A bond rating.
The spending plan approved by the General Assembly this week holds the line for most state agencies. State workers get a deserved 2 percent pay raise but 1,200 vacant positions are being abolished. School construction gained added funds (good news for the fast-growing Baltimore and Washington suburbs) and new money was pumped into community colleges and the state scholarship program.
Perhaps the most significant action on the economic development scene was approval of a $20 million "sunny day" fund. This gives Mr. Glendening the flexibility to offer big state grants to companies thinking of locating in Maryland. That is four times larger than any previous total allocated for this purpose. It sends a loud message that this legislature and this governor are committed to a jobs and business-growth policy.
Republicans in the General Assembly were anxious to use the $250 million placed in reserve funds for an immediate personal income-tax cut. That would have been highly risky. Until the state erases its structural deficit, until Maryland knows the precise fiscal impact of Congress' "devolution" of social programs and until this state's economy is on firmer ground, the emphasis in Annapolis should be on cautious, conservative belt-tightening and preserving this set-aside pool. The fiscal 1996 budget enacted into law Monday night admirably accomplishes those goals.