- The Washington Times - Saturday, April 9, 2005

ANNAPOLIS — The General Assembly yesterday unanimously approved a $25.9 billion budget for fiscal 2006 that included a rough $900 million cushion, but not before listening to warnings about future deficits.

“Do not believe we are coming out of our fiscal crisis, because we are not,” said Sen. Ulysses Currie, Prince George’s Democrat, before the chamber passed the budget 47-0.

Minutes earlier, House members heard similar warnings from Delegate Norman H. Conway, an Eastern Shore Democrat and chairman of the chamber’s Appropriations Committee.

Gov. Robert L. Ehrlich Jr., a Republican, submitted a $26.3 billion budget in January. Democratic leaders said the budget exceeded Maryland’s voluntary guidelines on growth, called spending affordability.

The legislature cut funding because “It was not fiscally responsible to exceed spending affordability,” Mr. Currie said.

The fiscal 2006 budget, which begins July 1, includes a rainy-day fund of more than $500 million, the percentage of the budget that bond-rating houses in New York City recommend for Maryland, which has a coveted AAA bond rating.

Mr. Conway said House and Senate budget committees hope their spending reductions will protect the rating.

Roughly $400 million of the projected $900 million surplus in the budget can be used to help balance the fiscal 2007 budget, which lawmakers will consider during next year’s legislative session.

The working estimate for next year’s budget hole is about $850 million, and using the surplus would cut that almost in half, making it easier for the governor and the legislature to reduce spending enough to keep the budget balanced.

The projected deficit is primarily the result of the continued increase in the cost of the state Medicaid program and mandated increases in spending for public schools, two items outside the control of the legislature and the governor.

The budget for the coming fiscal year does not include tax increases, but it also does not include a reduction in the state property tax that the House had proposed.

In Mr. Ehrlich’s attempt to balance the budget two years ago, shortly after coming into office and facing a big deficit, he proposed an increase from 8.4 cents per $100 of assessed value to 13.2 cents. The House wanted to return the tax rate to 8.4 cents, but Senate fiscal leaders agreed with the governor that the state’s finances are still too precarious to forgo more than $160 million in revenues.

The dispute held up final approval of the budget for several days before the House relented on the property tax in return for the Senate agreeing with the House to increase school construction funding from about $150 million recommended by Mr. Ehrlich to $250 million.

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Wal-Mart would have to spend more money on health care for its Maryland employees or pay money into the state Medicaid fund under legislation that also got final approval yesterday in the General Assembly.

Mr. Ehrlich has already pledged to veto the bill, which would keep it from taking effect at least until the Democratic-majority in the legislature gets a chance to override the veto. Unless there is a special session of the General Assembly this year, the first opportunity for a veto override will be when the legislature begins its 2006 session.

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After Mr. Ehrlich vetoed two bills dealing with elections and international trade, the Senate quickly voted yesterday to override both vetoes.

The House delayed votes on the two bills until tomorrow because several members were absent.

One of the bills Mr. Ehrlich rejected would make it harder for the State Board of Elections to remove the administrator of election laws. The second bill would withdraw Maryland from the Central American Free Trade Agreement.

The House is expected to join the Senate in overriding the vetoes when delegates return tomorrow for the final day of the session.

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