THE MONEY problems on Maryland's ship of state are still a bit below the water line, so only the green-eyeshade guys are sending out an SOS.

It's real bad, one of them said last week. Maybe the worst ever.

An emergency, said another.

A spokesman for Gov.-elect Robert L. Ehrlich Jr. responded by throwing the life preservers overboard.

Tax increases are a non-starter, he said.

Cuts in aid to local government? Off the table.

Aid to public education? Public safety? Health care? Floating out there along with the rest.

What remains then? What lifeboats? Two, apparently: slot machines and budget cutting.

But will those vessels get us to the still-receding shores of a more robust economy when tax receipts rise?

Not soon enough, say the money crunchers. Commitments by government outpace income by amounts sufficient to keep the budget in deficit for years - possibly for most of Mr. Ehrlich's four-year term.

Slot machine revenue alone will not bridge the gap, they say. Budget cutting may be necessary, but analysts say the easy years of budget balancing are behind us. The time when money could be borrowed from Peter to pay Paul are over. Peter is penniless. Maryland is broke.

Is anyone really listening in the understandably euphoric Ehrlich camp? Do its advisers have some illusion of balancing the budget with painless attention to waste, fraud and abuse? The most veteran of budget-makers, such as outgoing Democratic state Sen. Robert R. Neall of Anne Arundel County (whose bona fides include former membership in the GOP and a reputation for astute budget analysis), say only a combination of substantial cuts and increased taxes will be sufficient to solve the problems in the long and the short run.

No one on the Ehrlich side asked, but Mr. Neall says the new governor ought to consider a quick political move to save himself and the ship.

"He ought to quickly say, 'I had no idea it was so bad. And it's getting worse,'" Mr. Neall said. New revenue estimates due tomorrow could prove that point.

Mr. Ehrlich can try to cope bravely while his proud ship takes on water, or he can say a temporary rescue operation is, regrettably, unavoidable. Ten years ago, during another recession, the General Assembly approved a surtax on the wealthiest Marylanders. Some budget cutting was undertaken as well. The economy got so much better that income taxes were cut by 10 percent.

Then the politicians got dangerously political. They knew the water was rushing in. They knew we couldn't afford to complete the income tax cut at a cost of $177 million this year. But it was an election year. No one wanted to run on a "We had to save the ship" platform.

At the same time, the Assembly committed the state to $1.3 billion more in aid to public education. That promise plus a sharp drop in capital gains tax revenue and a national economic downturn helps to explain the depths of the current budget crisis.

None of this is Mr. Ehrlich's doing. He could probably escape terminal damage if he connected the deficit dots with a bright line leading to the Democrats.

But he may wish to offer Marylanders a much leaner government. It can be done, of course, but even the lean government adherents will hate it. What he could do instead is talk about what taxes pay for. No one does that anymore. It's all about the cost of "government." The connection between what we pay and what we get for what we pay is lost in a fog of resentment.

Perhaps the new governor believes he'll have a long honeymoon. People are definitely happy for him, giving him standing ovations and enjoying the GOP's "out of the wilderness" storyline. It's been 36 years, after all, since a Republican ruled.

It was all sweetness and cooperation last week as he continued his pre-inaugural victory lap at a Camden Yards breakfast meeting Monday.

"He made a lot of promises in the campaign, and we're going to help him keep those promises," pledged Senate President Thomas V. Mike Miller Jr.

"He ran as a Democrat," Mr. Miller went on, so we're going to try to help him keep his promises: saving all the Democratic programs without raising taxes. Slots? Democrats would support those, too, Mr. Miller said.

Here's a translation:

We'll help you get slots, but the ship could still be sinking by 2006. If you cut the programs you promised to save, you'll be sinking, too.

So, already a point of no return approaches. If taxes don't go up, the ship could founder. If they do go up, the new governor could founder - or save the ship.

Calculations of this sort are the real stuff of politics and leadership.

C. Fraser Smith is an editorial writer for The Sun. His column appears Sundays.