IS THERE a train wreck in the offing over this year's state budget? It's possible, with legislators adhering to a conservative budgeting approach vs. the governor's big-spending notions.
Something's got to give. Gov. Parris Glendening's budget request achieves balance only through use of a tobacco tax increase that may not happen and money from the national tobacco settlement that will be held in reserve. Even then, the governor missed the legislature's spending cap by $160 million.
That's only part of the problem. If lawmakers refuse to raise the tobacco tax -- a distinct possibility -- the budget gap rises to $315 million. There's another $150 million of supplemental budget items the governor has promised, such as the $27 million aid package for higher education.
Thus, the real budget gap is fast approaching a half-billion dollars.
This is a huge amount of money to cut. The governor cleverly tied his budget increases to popular programs. It won't be easy for lawmakers to eliminate extra funds for local classrooms, for instance.
Yet neither side shows signs of budging. Mr. Glendening foresees a major boost in social spending in his second term; lawmakers want to retain Maryland's cautious budgeting practices.
Legislative analysts have recommended about $90 million in cuts. That's not nearly enough to satisfy fiscal leaders in the General Assembly.
The problem is that the two sides view Maryland's economic situation quite differently.
Mr. Glendening sees nothing but sunny skies and happy fiscal days. Legislators know the good times are bound to end. They don't want to build into the budget too many added, continuing expenses that could prove unaffordable in a recession.
The governor's attitude toward spending Maryland's surplus differs sharply from President Clinton's approach on the national level.
Mr. Clinton has stolen another chapter from the Republicans' handbook and is now the champion of frugal fiscal policy. He wants to use surplus funds to reduce the government's public debt. Republican congressional leaders, meanwhile, are eager to dispose of this surplus with a tax cut.
The president's plan, perhaps the most sensible fiscal spending approach in generations, would nearly wipe out public debt: U.S. bonded indebtedness would drop from almost 45 percent of gross domestic product today to 7 percent in 15 years.
If this actually happens, it could have a dramatic impact on savings, private investment, interest rates and a continuation of national prosperity.
In Annapolis, meanwhile, the governor seeks to keep on spending that surplus as soon as it arrives. When the next rainy day hits, Maryland will have to dig deep into its reserves just to keep from drowning.
Look at the state's borrowing picture: Total outstanding debt in Maryland is $3.5 billion; it is expected to rise to $4.5 billion by 2007. Indeed, debt-service payments in the next year will jump 25 percent; nearly 15 percent of the governor's new spending is consumed by debt service.
There are no plans to pay down some of this debt, or to use the surplus to lower Maryland's reliance on new bonds for construction. That could come back to haunt the state once economic good times end.
The Calvert Institute, a conservative Republican think tank, issued a report during last year's gubernatorial campaign calling for massive debt repayment.
The report had plenty of flaws, but its basic premise was on target: The use of surplus funds to lower Maryland's annual debt payment frees up hundreds of millions of dollars for other purposes. Calvert proposed, not surprisingly, major tax cuts. Democrats like Mr. Glendening would opt for more social spending.
Either way, it makes no sense to pour tax dollars needlessly into debt service.
Why add to your mortgage payments year after year when you could, during a time of plenty, cut your payments and put more cash in your pocket?
The Glendening administration isn't in sync with the Clinton administration on this issue. Maryland's debt service continues to mount, depriving state leaders of millions each year that could go for far better purposes.
When the next economic slowdown, or downturn, occurs in Maryland, watch out.
Barry Rascovar is a deputy editorial page editor.
Pub Date: 2/21/99