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Republicans propose ways to fix Md. deficit

The Baltimore Sun

As Democratic leaders debate tax proposals to close a $1.5 billion budget shortfall, a group of Republican lawmakers says Maryland can solve its fiscal problems without tax increases by restraining spending and legalizing slot machines.

The proposal announced yesterday by the House of Delegates' GOP caucus calls for limiting spending growth next year to 3.5 percent and allowing 15,000 slot machines around the state -- measures Republicans said would preserve an adequate social safety net without dipping into taxpayers' wallets.

"We, ladies and gentlemen, do not have a revenue problem in the state of Maryland. We have a spending problem," said Del. Christopher B. Shank, the minority whip from Washington County. "Democrats are ready to raise the tax burden on hardworking citizens of Maryland, and we as Republicans are not having it."

Although the Republicans included some campaign-style political rhetoric in their presentation yesterday, the proposal reflects an effort by the GOP to carve out a role for itself in policymaking in Democrat-dominated Annapolis.

Shank and Del. Anthony J. O'Donnell, the minority leader from Southern Maryland, pitched their ideas to Gov. Martin O'Malley over pizza Tuesday night. Although the governor, a Democrat, pushed them for specifics, he told the Republicans that he welcomed their help.

"We appreciate their acknowledgment that a $1.5 billion deficit can't be closed by cuts alone when 84 percent of the budget is education, health care and public safety," O'Malley spokesman Steve Kearney said yesterday.

"The governor is willing to work with Democrats and Republicans alike to get our fiscal house in order," he said. "We've made $283 million in cuts so far and are interested in any specific suggestions for spending reductions the Republicans may eventually have to offer, in addition to their ideas on slots."

But other Democrats questioned whether the spending limits would really be as painless as the Republicans say. The GOP legislators did not offer specific ideas for what they would cut, but Democrats said the reductions in spending growth they want would mean that Marylanders would lose health care, child care and other vital services.

And the Republicans also face a challenge from fiscal conservatives, who have argued in recent days that slots are, effectively, no different from tax increases and will only encourage government spending growth.

The greatest savings in the GOP plan would come from reducing aid to local governments for education and other services. The proposal would cut by more than half the increase that would go to education as part of the 2002 spending formula known as the Thornton plan.

The GOP would allow significant growth in Medicaid -- 8.3 percent rather than the 10 percent budget analysts expect. Spending on other health programs, public safety and higher education would also increase by amounts ranging from 5.7 percent to 7.6 percent.

A key part of the Republicans' argument is the notion that they are not cutting spending, though documents the delegates released with their plan indicate they would cut funding to some agencies by 0.6 percent. They did not specify what they would cut, but the category they identified includes agencies such as Agriculture, Natural Resources, Environment and Human Resources.

Del. Steven R. Schuh, a freshman Republican from Anne Arundel County who has emerged as one of his party's authorities on budget matters, said the state can easily maintain present services without the 8.5 percent budget growth analysts predict.

"It's not as simple as 2.2 percent for inflation and call it a day, but it's not 8.5 percent either," he said. "In my judgment, this can be done without hurting people."

Democrats say that's not the case.

"There are programs the state has committed to either in law or in policy, and reducing that funding is a reduction in the services that we have promised," said Del. Murray D. Levy, a Charles County Democrat. "You can balance the budget that way, but to say it doesn't have any impact, I think, is not correct. It will have an impact, and depending on where they make the cuts, it could have a substantial impact."

O'Malley's budget department estimates that spending growth mandated by law would increase the size of next year's budget by 5.9 percent.

The 8.5 percent figure the Republicans are using reflects inflation, estimated caseload growth for state programs, increasing costs of entitlement programs such as Medicaid and the costs associated with new legislation passed this year.

It also assumes the state will fund at least a portion of the "Geographic Cost of Education Index," an optional part of Thornton that has not been funded before but that O'Malley supports.

Shank said the Republicans identified specific line items they would cut, but said they would only share their ideas with the governor and not the public.

"When we tried that with budget amendments in the last session ... we got our heads lopped off," Shank said. "We're not just going to let them call in all the interest groups and make us barricade the doors again."

The GOP included more specifics in its slots proposal. The party's plan calls for higher initial license fees than many previous plans -- $150 million for a 3,500-machine facility and $50 million for 1,500 machines -- and for an auction system in which gaming companies would compete to see who would be willing to give the state the largest share of the proceeds.

The Republicans did not offer specifics about the locations of slots facilities or whether race track owners would get preference for any of the licenses, which has been a component in previous plans.

O'Malley's labor secretary released a report Tuesday endorsing slots at the tracks, indicating that the governor will almost certainly make them a part of his budget proposal. That report didn't offer specifics of a slots program either.

The governor faced criticism from the liberal wing of his party over his slots stance yesterday, with Comptroller Peter Franchot issuing a statement of his disappointment in the administration's report. "As I read this report, here's what we get: less than anticipated revenue to the State, a windfall of profits to wealthy race track owners ... and the biggest tax on the working poor that this State has seen in a long time," Franchot said.

Meanwhile, the Republicans faced criticism from conservatives over their pro-slots stance. Dee Hodges, president of the Maryland Taxpayers Association, said slots are just a tax in disguise. The state should solve its problems by cutting spending, she said.andy.green@baltsun.com

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