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’13 Maryland budget forecasts doubt new tax hikes

- The Washington Times - Wednesday, October 17, 2012

ANNAPOLIS — Fresh from a year in which they raised taxes by $260 million, Maryland lawmakers said Wednesday that they don't expect to approve any new tax increases when the General Assembly reconvenes next year.

Members met Wednesday with state budget analysts to discuss issues facing the assembly's Spending Affordability Committee, which must make recommendations in December on how the state should reduce its structural deficit and close a projected $247 million shortfall in next year's budget.

Despite lingering concerns over the slow economic recovery and possible cuts to federal aid, analysts painted a rosy picture of the state's finances, which they said have been bolstered by the now-rebounding economy and revenue increases.

"We're getting so darn close to being balanced that I can almost smell it," said Warren G. Deschenaux, director of the state's Office of Policy Analysis. "And it smells good, but we're not out of the woods."

The assembly has consistently faced budget shortfalls in recent years as lagging revenues during the economic downturn have been met with built-in spending increases for many state programs.

Legislators typically have opted to balance budgets with new revenues and reduced spending increases instead of cutting programs or keeping overall funding flat.

They say the approach has enabled them to drastically reduce the state's structural deficit — an estimate of future budget shortfalls — by $1.5 billion over the past two years, although about $640 million still remains going into next year.

The estimated shortfall for next year's budget alone is $247 million.

Senate Budget and Taxation Committee Chairman Edward J. Kasemeyer said he expects lawmakers to balance next year's budget with relative ease and gradually eliminate the remaining structural deficit over the next two years.

He said next year is unlikely to include any notable revenue increases, unlike this year, when lawmakers raised income tax rates and shifted a portion of pension costs to counties.

Mr. Kasemeyer, Baltimore County Democrat, said he does not think lawmakers will increase taxes more, shift additional pension costs or even consider a long-debated increase in the state's gas tax.

Many state lawmakers were optimistic that next year's budget process will be less painful than those in recent years, but Republicans and some Democrats raised concerns that the state is not doing enough to cut spending or plan for worst-case scenarios.

"Some legislators have been here and never known a time when we didn't have big deficits," said Delegate Mary-Dulany James, Harford Democrat. "We're all here, and the state is still a great state, but somehow I think there are some long-term corrosive effects to this."

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