Cut the deficit by $200M, Maryland panel advises governor

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ANNAPOLIS — A panel of Maryland lawmakers Thursday recommended that Gov. Martin O'Malley cut the state’s projected budget deficit of $382 million by more than half in the next fiscal year.

The state’s spending affordability panel also voted to allow the state to increase capital debt limit by $150 million for the next fiscal year.

Maryland is required to have a balanced budget each fiscal year. However, projected spending has exceeded revenue in recent years in what’s known as a structural budget deficit. That means while the state has technically entered fiscal years with a balanced budget, a deficit has returned with stubborn regularity in recent years.

House Speaker Michael E. Busch, an Anne Arundel County Democrat, moved to recommend a reduction in the deficit for fiscal 2014 by at least $200 million. The panel approved it by a 17-3 vote.

Democratic supporters of the move noted the state will have nearly addressed a $2 billion budget deficit since 2010.

But Delegate Anthony J. O'Donnell, a Calvert County Republican who is on the panel, questioned why the panel did not seek a recommendation to eliminate the entire structural deficit.

“That would put us in a better fiscal position for the exposure we have to actions that may occur down on Capitol Hill,” Mr. O'Donnell said, referring to budget negotiations relating to the “fiscal cliff” in Washington.

The fiscal cliff refers to across-the-board spending cuts and tax increases if an agreement isn’t reached between Congress and President Obama. Maryland is particularly susceptible to federal cuts because of its proximity to the nation’s capital.

Mr. Busch said the Maryland General Assembly could come back and make further cuts during the session, which begins Jan. 9 and extends through the middle of April. Mr. O'Malley, a Democrat, is scheduled to submit his budget Jan. 16.

“It does not mean that once the governor brings the budget in you cannot make more cuts,” the speaker said.

Mr. Busch also noted that additional revenue from expanded gambling, approved by voters last month, projects a significant boost to state revenue in future years.

“So I think, under those circumstances if those revenues hold up, that we will actually be revenue-neutral here,” the speaker said.

The panel also voted to approve a recommendation by the Capital Debt Affordability Committee that a maximum of $1.075 billion in debt be authorized for the 2013 session. That represents a $150 million increase over what the committee had planned.

Democratic supporters noted that the money would be used to pay for job-producing infrastructure improvements in the state, such as ones needed for transportation, a funding area that has been hit hard in Maryland. Mr. O'Donnell said he thought increase would put the state on a path to continue raising the debt limit and expressed concern it could lead to a property tax hike down the road.

The panel’s recommendations are not binding on the governor.

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