Md. agencies asked to cut budgets 7% State's spending chief tells officials to plan for leaner fiscal '98; Not an across-the-board trim; Departments also told to prepare outlines for current funding


Gov. Parris N. Glendening's budget chief has told most state departments and agencies to prepare budget proposals for next year that incorporate a 7 percent reduction from current spending levels.

Frederick W. Puddester, the state budget secretary, confirmed last week that he had issued such an instruction as a means of presenting the governor with a range of options to close a projected $200 million budget shortfall.

"This is absolutely not an across-the-board cut," Puddester emphasized. He said agencies also were told to prepare an alternative budget proposal maintaining current spending levels.

Puddester said his order exempts public safety, higher education and economic development programs, although officials of those agencies have been asked to propose innovations that would save unspecified sums of money.

Entitlements such as Medicaid and programs with funding based on a fixed formula, such as local school aid, also are not affected by the order. However, Puddester said state Health Secretary Dr. Martin P. Wasserman has been asked to propose alternatives for reining in Medicaid spending.

The state is in the early stages of its budget-making process for the fiscal year that begins July 1, but it already is anticipating a $200 million shortfall because of sluggish revenue collections.

Puddester's order comes as many public officials, including Baltimore Mayor Kurt L. Schmoke, are urging the governor to look to an expansion of legalized gambling as a possible means of alleviating the state's budget problems and providing more money for education.

The governor has resisted gambling as a solution to budget problems, but he appears recently to have opened the door by at least a crack.

Schmoke has said the governor last month agreed to a plan to allow slot machines at Maryland racetracks, although Glendening maintains that approval depends on his being shown proof that the state's racing industry is being hurt by competition from Delaware, which allows slots at racetracks.

Puddester's problems in closing the budget gap illustrate why the lure of gambling revenue is so seductive.

He noted that the governor can order cuts only to an estimated $3 billion in state spending. The remaining $4.5 billion goes to such programs as school aid and Medicaid, which are set by law.

With public safety spending of $700 million to $800 million and higher education spending of $644 million also exempt, that would leave roughly $1.5 billion in spending affected by the 7 percent order.

Puddester said the effort is intended to close the $200 million gap, not provide room for the income tax cut many state business leaders are clamoring for.

"If I were to add up all the 7 percents, it alone would not balance the budget," he said.

Pub Date: 8/05/96

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