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Townsend to reveal proposal to close state's budget gap


Lt. Gov. Kathleen Kennedy Townsend plans to release a detailed proposal for plugging the state's widening budget gap today, a plan she says can be accomplished largely without new taxes but not without pain.

Townsend said yesterday that she has drafted a list of cuts for the $21.7 billion budget, which took effect in July. Most are one-time trims, she said, but a substantial amount are reductions in continuing operations, which would produce savings in future years.

She said she has another list of cuts for the first budget that would be prepared by the next governor and become effective July 1.

Townsend said she has developed a list of more than $1 billion in new revenue for the 2004 budget year and is pledging to not raise taxes if elected governor - with the possible exception of a tobacco tax increase.

Only about half of the items on the billion-dollar menu would be needed, said Townsend, but all should be debated by lawmakers and the public.

The budget cuts, said Townsend, "are specific, they are detailed and they are tough."

"This is not a pleasant experience," she said, speaking before the editorial board of The Sun, where she declined to release full details of her proposal until today. "It will cause some pain. But it is the right thing to do, because we need to constitutionally balance the budget, and I want to do it in a way that doesn't raise taxes."

She said she does not want to rely on revenues from slot machines, unlike her opponent, Rep. Robert L. Ehrlich Jr., who released a budget proposal containing such gambling revenues last week.

"Every detail, of course, is not worked out, because we have to work with the General Assembly," she said. "But what it does say is I'm taking this seriously. ... I want to make sure that people know I understand that there is a budget problem."

A spokesman for Gov. Parris N. Glendening, who has authority over this year's budget, said yesterday that the governor has not seen a specific list of reductions from Townsend.

As the national economy teeters and income tax revenue into the state's coffers declines, it is becoming increasingly clear that balancing next year's budget will be the most difficult task facing the next governor and General Assembly.

A week ago, state officials revealed that Maryland's tax money was coming in slower than expected, with much of the decline attributable to a drop-off in the capital gains portion of state income tax.

The slowdown means that, without spending cuts, the 2003 budget year would end with a $414 million hole, and the 2004 year would start with a $1.3 billion gap. By law, Maryland must have a balanced budget, so a combination of cuts or revenue increases - through taxes, fees, or transfers from reserves or the federal government - is needed to plug the hole.

Townsend spokesman Peter Hamm said yesterday that Townsend has put a tobacco tax increase on the table as a way to pay for health care and drug treatment.

Democratic legislative leaders said yesterday that they have seen drafts of Townsend's plan and praised it, describing at more responsible than what Ehrlich has proposed.

"I've seen enough of her proposal that I'm quite sure what you'll hear is reality more than rhetoric," said House Speaker Casper R. Taylor Jr.

Del. Howard P. Rawlings, chairman of the House Appropriations Committee, said Townsend has found a way to close the budget gap without resorting to increasing taxes.

"The proposal you'll see from Kathleen Kennedy Townsend will address the structural deficit in the budget," Rawlings said. "It will make a stronger commitment not to raise taxes."

The Assembly's Democratic leaders had gathered yesterday to further criticize Ehrlich's budget plan as unrealistic.

Taylor, Rawlings and Senate President Thomas V. Mike Miller were critical of Ehrlich's estimates of how much money slot machines would generate. They said the legislature would only approve slot machines through a measure requiring a referendum, delaying revenues until after November 2004.

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