The latest tax receipts provide further proof that Maryland is not recession-proof. The slowing economy has hit sales, personal income and other taxes hard enough to open up a $432 million gap in the state budget. That could balloon to about $1 billion in the next fiscal year.

Gov. Martin O'Malley now faces some difficult choices. He must either find ways to reallocate and stretch existing resources (call it the "borrow from Peter to pay Paul" solution), offer significant and immediate cuts in spending or do some combination of both.

Creative bookkeeping may prove tempting. The revenue from 15,000 legalized slot machines, if approved by voters in November, would go a long way to wiping out the deficit in the long term. From that standpoint, a short-term, stopgap solution might be adequate. It's the sort of thing Gov. Robert L. Ehrlich Jr. did to keep the state budget afloat early in his term. But it would also be foolhardy. There is no guarantee that voters will endorse the slots referendum, and delaying spending cuts could easily make matters worse. After blasting his Republican predecessor for robbing transportation and land conservation programs to address previous deficits, Mr. O'Malley would look foolish if he duplicated the same tactics now.

Instead, after tapping the state's $186 million in undesignated surplus, the governor needs to call on his agency heads to find $250 million to $300 million in savings that leave essential programs unharmed. This may mean fewer state-financed advertising campaigns. It may mean a squeeze on state contractors.But that's the easy stuff. Much of the remedy won't be as painless. Under law, Mr. O'Malley can't touch most K-12 education spending, and that will put a greater burden on Medicaid, public safety and higher-education programs, which make up a huge chunk of the budget. Capping the state's annual contribution to teacher pensions, for instance, could save about $100 million, but it's a strategy that's likely to raise a political ruckus.

Maryland is not in a unique position. Many other states have fared worse. At least 29 have recently racked up a collective shortfall of $48 billion in their current budgets, according to a nonpartisan, nonprofit organization that analyzes government spending.

Politically, Mr. O'Malley can't be happy with the timing. After raising taxes to mend the state's structural deficit (the long-term imbalance between projected revenues and spending), a flagging economy has caused a new, albeit more short-term, gap in state finances.

Still, it's better to be prudent and make the necessary cuts even if some needed programs will be shortchanged. Nothing else is certain to relieve the problem.