Glendening proposes hefty budget; $17.7 billion exceeds Assembly's ceiling; cigarette tax included

THE BALTIMORE SUN

Blessed with surging state revenues, Gov. Parris N. Glendening is proposing a $17.7 billion budget for next year that would reward friends, punish at least one enemy and is far too fat to meet the legislature's self-imposed spending limits.

In the first budget he has submitted since his re-election in November, the governor said he was honoring his campaign pledges to increase funding for education from kindergarten through 12th grade, state colleges and public safety.

Glendening did not follow through on a campaign proposal to accelerate the 10 percent, five-year income tax cut passed in 1997, even though the state has a surplus of more than $250 million.

Some legislative leaders advised the governor yesterday to hold off for a year on efforts to increase the state's tax on gasoline, the revenue from which is mostly dedicated to highway and mass transit projects.

Even former advocates of the tax increase, which many business leaders consider necessary to shore up the state's transportation fund, were backing away from proposals to raise Maryland's 23 1/2-cent-a-gallon gasoline tax by as much as 5 cents.

"I came in here a month ago thinking we could address this transportation tax problem this year," said House Speaker Casper R. Taylor Jr., an Allegany County Democrat. "I'm becoming more and more convinced by the hour that we can't."

Ray Feldmann, a spokesman for the governor, said Glendening is weighing whether to push for the gasoline tax increase this year or next.

Instead, the governor focused on his budget proposal, which will be formally submitted to the legislature next week.

The state's general fund, the portion of the budget over which the governor has the most authority, would grow by nearly 6 percent, to more than $9 billion, under the spending plan Glendening outlined yesterday.

The governor's budget exceeds the legislature's limits on the growth in state spending by more than $150 million.

Governors have ignored the legislature's "spending affordability" limits, but no governor's budget has come in as far above the recommended ceiling for many years, legislative budget analysts said.

Key legislators said yesterday that they were prepared to trim the budget to meet the guidelines.

'Room to cut'

"That's automatic," said Senate President Thomas V. Mike Miller, a Prince George's County Democrat. "There's certainly room to cut, and a good portion of it is going to have to come from what the public considers a priority, and that is education."

The spending plan comes with what Glendening's budget secretary called a "catch": It includes $155 million that would be generated by the governor's proposed $1-a-pack increase in the state's tax on cigarettes.

If the legislature refuses to go along with the first 50-cent boost in the cigarette tax, which would come this year, it must trim the budget by $155 million, which lawmakers don't relish.

Under the Maryland Constitution, the Assembly can cut the governor's proposed budget but not add to it.

Seeking to add more pressure in support of his cigarette proposal, Glendening has identified seven major higher education construction projects that would be funded from the proceeds of the second 50 cents of the tax increase, which would go into effect next year.

If that portion of the tax is defeated, those campuses would likely have to wait several more years for the projects to be built.

'Cleverly done'

"It's an extremely cleverly done budget," said Sen. Barbara A. Hoffman, head of the Senate budget committee. "It does create a constituency for a cigarette tax."

Glendening defended the proposal, saying he believed the state's voters endorsed it in last fall's election.

"I ran on the tobacco tax to protect our children and won big," Glendening said.

The governor has focused the increases in his budget on education spending and compensation for state workers.

The state's universities and colleges would receive $102 million more in state support, an 11 percent increase.

Of that, $63 million would go to the University System of Maryland, a 10 percent increase.

"I think that's spectacular," Donald N. Langenberg, the system's chancellor, said of the proposed increase.

"The governor is continuing what was established last year with his four-year plan to fund the University System so it can reach the level of quality that was envisioned in 1988," Langenberg said.

The aid to the UM system could grow during the session if more state revenue is available, said Budget Secretary Frederick W. Puddester.

Glendening followed through on a campaign pledge by allocating $250 million to build and repair public schools. The governor plans to continue that high level of funding for four years, which would significantly reduce the state's backlog of school construction projects.

"We have a great opportunity to move the state forward, to make some critical investments in our future, while remaining fiscally prudent," Glendening said in a statement.

The state employee unions worked hard for his re-election, and the governor's budget treats state workers well. Glendening included an across-the-board pay raise of $1,275 for each employee, a raise negotiated last year with unions. It would cost the state $53 million.

Glendening included an additional $59 million compensation package, including $13 million for a "pay for performance" plan that would send annual bonuses of $500 or $1,000 to top employees. Overall, many state employees would stand to get raises of more than 6 percent, Puddester said.

'A catch-up game'

Sue Esty, a lobbyist for the American Federation of State, County and Municipal Employees, applauded Glendening for moving to improve state workers' pay but said such attention was long overdue after many years of small raises or none at all.

"This is a catch-up game," Esty said.

A ranking Republican delegate said Glendening had gone overboard in his budget proposal.

"He's totally abdicated his responsibilities to make difficult choices involved in governing the state of Maryland. He said yes to everybody," said Del. Robert L. Flanagan, a Howard County Republican who is the House minority whip. "He simply passed the buck to the legislature to make the difficult decisions."

No aid for racetracks

Missing from the governor's budget is any assistance to the state racing industry. Over the past two years, Glendening and the General Assembly have sent $18 million in state funds to boost horse racing purses and assist state racetracks.

The lack of assistance was widely viewed as Glendening's payback to Joseph A. De Francis, principal owner of the Laurel and Pimlico race courses, who contributed $250,000 to the national Republican Party and helped raise money for Glendening's Republican opponent, Ellen R. Sauerbrey, in last year's election.

"It's just not a priority this year," said Ray Feldmann, spokesman for Glendening. "The governor feels the industry has to do some things on their own, such as marketing."

Miller told administration officials yesterday that the public has not been sold on the need for a gasoline tax increase.

"I told them they need to develop a body of public attention," said Miller. "It's like the public is thinking, 'Manana, don't do it to me today.' "

The governor heard similar advice yesterday evening from Hoffman, the budget committee chairman, who said she told the governor the tax should not be increased until the state has a "coherent strategy" consistent with his Smart Growth anti-sprawl initiative.

Budget highlights

Here are highlights of Gov. Parris N. Glendening's proposed budget for fiscal 2000, which begins July 1.

Overall: The governor proposes total spending of $17.7 billion, up 4.7 percent. But general fund spending would rise nearly 6 percent, which is likely to concern legislators. The General Assembly is permitted to cut the budget, but not add to it.

Higher education: With a $102 million increase, or 11 percent, state colleges are big winners in the budget. In addition to previously promised increases, the proposal includes $17 million requested by the University System of Maryland Board of Regents, $7 million of it for the flagship College Park campus. The budget also contains money for a scholarship program for would-be teachers.

Public schools: Direct aid to local public schools and libraries would increase by $84 million, or 4 percent. The governor also proposes spending $250 million on school construction, $90 million of which would be financed by bonds.

State employees: In addition to $53 million for a previously planned 2 percent cost-of-living increase, the budget includes $59 million for additional pay and benefits for state employees. The budget would turn 1,461 contractual positions, which provide no benefits, into full-time jobs.

Public safety: Spending would increase at a 5.9 percent pace, including money to finance a doubling of the "hot spots" program. The state police would receive a 6.2 percent budget increase.

Human services: The budget contains $13.5 million to continue efforts to eliminate waiting lists for services to the disabled. It also includes an additional $8.2 million for child welfare services and $5 million for substance-abuse treatment.

Taxes: The budget leaves no room for new income tax cuts, and it anticipates $155 million in new revenue from the first 50 cents of a dollar-a-pack increase in the tobacco tax. The second year of the tax would finance $210 million in higher education projects, which would go back on a waiting list if the tax wasn't passed.

In Annapolis

Highlights in Annapolis today:

Senate convenes at 11 a.m., Senate chamber.

House of Delegates meets, 10 a.m., House chamber.

House Appropriations Committee holds briefing on welfare reform and poverty issues. 1: 30 p. m. Room 130, House office building.

Sun staff writers Gady A. Epstein, Timothy B. Wheeler and Michael Hill contributed to this article.

Pub Date: 1/15/99

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