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Leaders differ on budget fix

The Baltimore Sun

OCEAN CITY -- Jockeying over how to solve Maryland's projected $1.5 billion budget shortfall has intensified, with the state's top leaders staking out often conflicting positions about what spending cuts, tax increases and new revenues should be on the table for discussion.

Despite near-universal agreement in Annapolis that fixing the state's persistent gap between revenues and spending is a top priority, no concrete proposals have emerged. No government commissions or task forces are studying the state's budget. And Democratic Gov. Martin O'Malley has not mounted a promised public campaign to lay out the difficult choices the state faces.

But O'Malley and other state leaders have hardly been silent. Addressing a conference of municipal officials yesterday, Comptroller Peter Franchot called for a comprehensive review of the state's revenue structure that leaves open every option - except legalized slot machine gambling. House Speaker Michael E. Busch dismissed the idea of a special session of the General Assembly to fix the budget. O'Malley said this week that he would try to avoid cuts in aid to local government, and Senate President Thomas V. Mike Miller, a Southern Maryland Democrat, and other senators remain steadfastly opposed to raising taxes without legalizing slots.

All of that leaves lawmakers with a narrowing set of options for how to solve the problem - or with a big fight on their hands.

"The governor said we're going to use all the open-space money for open space. He's not going to raise [university] tuition, and yesterday he said he's not going to cut local government," Busch, an Anne Arundel County Democrat, told a group of local officials at the Maryland Municipal League conference. "That leaves us with a pretty big challenge."

The stakes for the budget debate will become clearer today when state lawmakers at a hearing in Annapolis receive the Department of Legislative Services' "doomsday budget," a document showing how deeply state services would have to be cut to close the "structural deficit" without raising new revenues. The document is expected to show steep cuts in health care and education, two politically popular areas of the budget that constitute much of the state's general fund.

Sen. David R. Brinkley, the minority leader from Frederick County who unsuccessfully proposed strict spending limits this spring, said the publicity surrounding the budget and the public pronouncements of Democratic leaders are all a means of preparing Marylanders for tax increases.

"This is being put forward to justify tax increases that do not need to take place," Brinkley, a Republican, said. "They're going to wave around some favorite programs and use that to justify tax increases, and it's interesting that ... the governor keeps taking options off the table. He's painted himself into a corner."

Miller, long a champion of slots, has insisted that the state must tap the potential revenue available from expanding gambling - he estimates as much as $800 million a year - before asking for tax increases. O'Malley supports allowing a limited number of slots at the racetracks to help the horse racing industry.

But Franchot laid out yesterday the parameters he thinks the state should follow in crafting a budget solution. It should be comprehensive; the process for developing it should be inclusive; its effects on residents should be fair; and it should not involve slots, he said.

"We should not institute a program we know will disproportionately affect those who can least afford it, and, of course, I'm talking about slots," Franchot said.

Although O'Malley has given some indication of programs he will try not to cut, he has not ruled out specific tax increases or new revenue sources. He has also not revealed the results of his directive that Cabinet secretaries find a total of $200 million in cuts, a process he said is not complete.

He reiterated, though, that he believes Marylanders would not choose to balance the budget only through spending cuts, even if it means higher taxes.

"It is my firm belief that given the choice as to whether or not to make progress or see their state and quality of life decline, they'll choose progress," O'Malley said.

The governor doesn't have much time to finalize a plan, particularly if he intends to call the General Assembly back into a special session to vote on it, said Del. Sheila E. Hixson, a Montgomery County Democrat and chairwoman of the Ways and Means Committee. Proponents say a special session would help prevent the budget debate from becoming bogged down in other issues and would allow tax increases to take effect sooner.

Members of Hixson's committee have scheduled meetings for the late summer and fall to discuss changes to the state's tax code.

"We're looking for direction from the governor," Hixson said. "I'm nervous. If we're going into a special session in October or November, at least we really need to have some options so we can sell them."

Miller has pushed a special session, though O'Malley has not committed to it. Busch, a critic of legalized slot machine gambling, said yesterday that holding a special session would be a mistake.

Said Busch: "The prospect of having the governor and General Assembly come in and in two days pass taxes and possibly an expansion of gambling will leave a bad taste in the mouth of everyone who ever voted for an elected official."

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