Gov.-elect Robert L. Ehrlich Jr. warned state workers yesterday that a pay raise promised by the outgoing governor would result in layoffs as the new administration struggles with a $1.8 billion budget shortfall over the next 18 months.
“You can’t have it both ways,” Mr. Ehrlich said of the trade-off between more pay and job security.
The comment came at a Board of Revenue Estimates meeting where Mr. Ehrlich received the latest budget figures: The state faces a $550 million shortfall in the fiscal year ending June 30 and a $1.3 billion shortfall to be reconciled in Mr. Ehrlich’s first budget, due Jan. 17, for fiscal 2004.
Comptroller William Donald Schaefer, a veteran politician and former Maryland governor, said at the meeting that Mr. Ehrlich faced the biggest challenge of any governor in his lifetime.
He called outgoing Democratic Gov. Parris N. Glendening’s promise to give state workers a 2 percent pay increase when state revenue is falling a “dirty trick.”
The news wasn’t all bad. The revenue estimates were in line with earlier projections, but falling revenue numbers have leveled off since March. Analysts predicted that state revenue would return to a modest growth rate by the end of 2003, similar to the growth experienced before the stock market boom of the late 1990s.
The state, however, is not taking in enough money to pay for existing programs.
Mr. Ehrlich, the first Republican governor elected in Maryland since 1966, said he was committed to his campaign promise not to raise state income or sales taxes. He added that he was considering a plan to eliminate the state sales tax, which he said was unfairly applied because lobbyists for various business interests had secured exemptions.
He said that state workers promised raises by Mr. Glendening a proposal that would cost an estimated $100 million would have to “live in the real world.”
Mr. Ehrlich said his budget team was working on plans to balance the budget by streamlining government and offering early-retirement incentives to state workers. He said he wanted to avoid widespread layoffs.
Mr. Schaefer said the pay-raise issue was a booby trap left for the new governor.
“Not only was it unrealistic, it was a dirty trick,” said Mr. Schaefer, a Democrat and longtime critic of Mr. Glendening. “[Mr. Ehrlich] is being set up to be blamed for this. If he cuts the raise, he gets blamed.”
Mr. Ehrlich refrained from commenting on the motives of Mr. Glendening, who did not attend the meeting.
Glendening spokesman Charles F. Porcari responded to Mr. Schaefer’s remarks, saying the comptroller himself was scheduled for a salary increase from $100,000 to $125,000 starting next year. He characterized the 2 percent hike as a “modest salary increase” for road crews, police and care providers to developmentally disabled people.
He said Mr. Glendening would erase the $550 million shortfall for fiscal 2003 before leaving office Jan. 15.
Mr. Glendening responded Sunday to state lawmakers who have criticized the proposed raises as political and irresponsible, saying state workers “have not had a raise for the last three years.” He pointed out that members of the General Assembly voted themselves a 38 percent pay increase over four years in the last session.
He announced a plan last month to erase $400 million of the shortfall but has yet to act. Instead, he authorized a $20 million purchase of public lands and secretly negotiated raises with the government worker unions that have been his political base since he was the chief executive officer of Prince George’s County.
Mr. Glendening’s tenure as Prince George’s top elected official ended with the county more than $100 million in the red.
Mr. Schaefer said balancing the budget while maintaining essential government services will not be easy for the new governor.
“Every penny was stripped out of this budget,” he said. “There’s no money left.”
This article is based in part on wire service reports.