Maryland's budget woes appeared to worsen yesterday as legislative analysts reported the current year's projected shortfall has increased by more than 40 percent to $590 million.
But the analysts offered slightly better news to legislative leaders for the next fiscal year, saying the budget gap will be only $1.2 billion -- about $100 million less than the projection of two months ago.
The combined two-year budget shortfall is predicted to be almost $1.8 billion. And if Maryland continues along its current path, the state will be taking in enough revenues to cover 90 cents for every dollar it is spending, said Warren G. Deschenaux, the General Assembly's chief fiscal analyst.
"That indicates some stress in the situation," Deschenaux told the Joint Spending Affordability Committee, a panel of legislators and business leaders that advises the governor and Assembly on spending limits.
As for this year's budget situation, "It is somewhat worse than we thought, and it will require somewhat more drastic action," Deschenaux said.
Maryland's budget for the current year is more than $21 billion. But the projected shortfall deals only with the approximately $10.5 billion "general funds" portion that covers most state services and aid to local jurisdictions for such areas as public schools.
The state constitution requires Maryland to have a balanced budget, which will force officials to make large cuts to spending or to find new revenue sources -- or both. "Changes will necessarily be made because the budget needs to be balanced when introduced and passed," Deschenaux said.
The budget shortfalls have been blamed on steep drops in anticipated income from tax collections and significant increases in such areas as aid to education and health assistance to the poor.
Two months ago, the comptroller's office predicted the current year's shortfall would be about $415 million, and next year's budget gap would be about $1.3 billion.
Legislative analysts increased the projected shortfall for this year by almost $200 million because of a further slowdown in some tax collections, as well as increased expenses in such areas as mental health services and foster care. Deschenaux described it as "the acute deterioration of the situation for the current fiscal year."
In the current year's budget, the only significant cut made by Gov. Parris N. Glendening has been to tighten a state hiring freeze that has been in effect for more than a year.
The governor had said he wanted to wait to make more significant cuts until after the election, and Glendening is to meet with Gov.-elect Robert L. Ehrlich Jr. this week to discuss spending reductions.
Glendening said last week that when he leaves office in January, he intends to have made enough cuts so that the year's books are balanced.
The state's budget problems became a major topic of debate during the gubernatorial campaign, with Ehrlich arguing that the projected shortfall was a sign of fiscal irresponsibility by the administration of Glendening and Lt. Gov. Kathleen Kennedy Townsend. He called for a special session to be held immediately after the election to deal with the budget, though he has backed off from that request.
Yesterday, Lt. Gov.-elect Michael S. Steele said the new administration is eager to start work on the budget situation.
"We're ready to roll up our sleeves and take this on," Steele said after the briefing, which he attended. "We're in some serious stuff, and the people of Maryland need to be prepared for it."
Lawmakers indicated that the continuing bad fiscal news will dominate the 2003 Assembly session, which opens in January. "The budget will be a key, if not the key, item," said Del. Norman H. Conway, an Eastern Shore Democrat and chairman of the spending affordability panel.
The committee is set to decide on recommended limits for next year's budget Dec. 17. While the governor and Assembly are not required to abide by those limits, the legislature typically tries to stick by them.
Some legislative opponents of gambling said they fear the budget situation will increase the pressure on the Assembly to approve slot machines at Maryland horse tracks as a means to generate more revenues -- a proposal pushed by Ehrlich during the gubernatorial campaign.
"You look at all of this doom-and-gloom, and people are going to say we have to do slots," said Sen. Thomas M. Middleton, a Charles County Democrat and chairman of the Senate Finance Committee. "That's not the way it has to be. We have other options."
He said the legislature could slow the increases in school aid called for by the Thornton Commission plan approved last spring -- though that's not an option he would support.