- The Washington Times - Thursday, November 21, 2002

Gov. Parris N. Glendening introduced a plan yesterday to eliminate the state's estimated $498 million budget deficit by imposing spending cuts for most agencies but avoiding layoffs for state workers.
Mr. Glendening said the plan, which spared K-12 education from cuts, would leave Gov.-elect Robert L. Ehrlich Jr. a balanced budged and $646.7 million in cash reserves when he takes office in January.
The plan called for cutting $172 million in spending and taking $189 million from the state's $500 million revenue-stabilization fund informally known as "the rainy-day fund."
However, Mr. Glendening insisted that department heads avoid layoffs whenever possible.
"It's a start and it's just a start," said Paul Schurick, spokesman for the Ehrlich transition team.
Mr. Schurick also said the plan needs to be examined closely because it appeared to rely mostly on one-time savings and does little to reduce next year's anticipated $1.5 billion budget shortfall.
"The cost of state government has got to shrink," he said.
Mr. Glendening based his plan on projections that the deficit will reach $498 million. Other estimates show it as high as $590 million.
Though Mr. Glendening can immediately order the average 4.9 percent cuts from most agency budgets, legislative action in necessary to tap the rainy-day fund and other money-moving measures. No such action is likely to happen until after Mr. Ehrlich takes office.
The cuts include reducing the $4.5 billion education budget by $44 million, or 1 percent, mostly by slashing the administration budget for higher education. The $1.5 billion public-safety budget would be cut by $51.6 million, or 3.4 percent, mostly in the areas of the judiciary and juvenile justice.
The plan does not include increasing the state income or sales taxes, which Mr. Ehrlich strongly opposes, but it proposes eliminating the graduated withholding schedule for state income tax to create a temporary revenue increase.
The state now withholds 2 percent of the first $1,000 earned by taxpayers, 3 percent of the second $1,000 earned and 4.75 percent of earnings over $3,000. By eliminating the progressive deductions, the state would take in about $1 more each week from most taxpayers.
The additional revenue would be returned to taxpayers in higher refunds.
Mr. Glendening also proposed eliminating a $200 lump-sum payment to state employees who earn more than $60,000 a year. The $13 million in payments were promised to them in return for giving up a cost-of-living raise this year.
The governor proposed shifting $57.8 million from special accounts into the general fund. Those accounts include $26.1 million from the injured workers insurance fund, $12 million from the University System of Maryland, $10 million from the unclaimed-prize fund of the state lottery and $8.4 million from the dedicated purpose fund for welfare.
The balance remaining after transferring money out of about 12 accounts would be $343.1 million. With the $303.6 million remaining in the rainy-day fund, the next administration would enter budget negotiations with a total $646.7 million fund balance.
The rainy-day fund likely would have to be returned to its $500 million legal minimum during the next budget year. The other funds would not have to be immediately restored.
The announcement follows a career for Mr. Glendening in which he has been criticized for leaving deficits to his successors.
"Look at Prince George's County," said Maryland Senate Minority Leader J. Lowell Stoltzfus, Eastern Shore Republican and a member of the state Senate's budget and taxation committee. "He left a mess there. Now he is leaving the state in chaos."
Mr. Stoltzfus also said the governor responded too slowly to the shortfall and that the delay hurt because the cuts could have been spread out to lessen their impact.
"We asked him to step up and if he would have, it wouldn't have been as big a problem as it is now," he said. "But they didn't want to cost Democrats votes. It ended up backfiring."
When Mr. Glendening stepped down as Prince George's County executive in January 1995 to become governor, he left behind a budget shortfall of more than $100 million.
Supporters point out that Mr. Glendening inherited a $35 million deficit when he won the county executive job from Republican Larry Hogan Sr. in 1982.
They also say the country was emerging from a recession when Mr. Glendening left the county in 1995 to become governor.
"That was a special set of circumstances," said David Paulson, of the Maryland Democratic Party.
Charles Porcari, spokesman for the governor, said Mr. Glendening is not alone with his budget problem this year, because 46 other governors are facing similar situations.
Mr. Ehrlich has been critical of Mr. Glendening's budget problem and used it as a campaign issue to defeat Kathleen Kennedy Townsend, the lieutenant governor under Mr. Glendening.
He blamed the problems on "overpromising and overspending," but the men have had at least a working relationship since the Nov. 5 election.
They met Saturday to discuss a budget solution during a meeting at a National Governors Association in Austin, Texas.
Still, state legislators could also present their own plan, which likely would include increasing state taxes, cutting pay for state employees and reducing the number of student scholarships.
New revenue estimates place this year's deficit at $600 million, about $200 million more than previously reported. If the deficit carries over to the budget year beginning July 1, the anticipated shortfall next year will reach almost $2 billion.


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