- The Washington Times - Friday, September 20, 2002

BALTIMORE Republican gubernatorial nominee Robert L. Ehrlich Jr. yesterday pledged not to raise income taxes or cut local aid, but Democratic nominee Kathleen Kennedy Townsend refused to rule out either option to shore up an estimated $1.6 billion budget deficit.

Presenting a "budget framework" for reporters in Baltimore, Mr. Ehrlich vowed that his budget would include "no increase in the state's income taxes, no increase or broadening of the state's sales tax no cuts to local aid." He did not rule out increasing some fees or the gas tax.

Mrs. Townsend declined to rule out tax increases or cuts to local aid. Instead, she said those options are not part of her budget, which she described as "tough and austere" and which she has yet to make public.

"I don't think it is responsible for any serious candidate for any office to ever rule anything out completely, but it is not part of my plan," the lieutenant governor told reporters yesterday in Odenton.

She said she had not closely studied Mr. Ehrlich's budget framework but called it a "flimflam plan."

Mrs. Townsend denied reports that she planned to reignite her campaign by replacing running mate Adm. Charles R. Larson. She also dismissed reports that she met recently with state Democratic leaders to brainstorm about ways to revive her campaign.

"This campaign is strong, and it is getting stronger," Mrs. Townsend said.

A Mason-Dixon poll released this week showed Mr. Ehrlich leading Mrs. Townsend for the first time, 46 percent to 43 percent, with a margin of error of four percentage points. Mrs. Townsend, a daughter of Robert F. Kennedy, had led by 13 percentage points in March.

"The poll numbers are down because people don't know my opponent's record," Mrs. Townsend said.

In a news conference in Baltimore, Mr. Ehrlich made his no-new-taxes pledge and touted a budget he said would raise $800 million in new revenue from slot machines at horse-racing tracks. The Republican congressman offered other, more modest revenue gains, such as making $5 million from selling the governor's plane, yacht and stadium boxes.

He said the budget framework, which also promises to spare state workers from layoffs, was designed to close the deficit caused by a six-year "spending spree" by Gov. Parris N. Glendening's administration, which saw spending rise 60 percent while the personal income of Marylanders rose 43.7 percent.

Mr. Ehrlich said he intends to keep his pledge on taxes.

"As we sat down with our budget plan for the purposes of the campaign and transition these are the principles we started with," he said. "And because of that [budget] gap, I said, 'You can't go to the people with any credibility and talk about tax increases.'"

The budget outlook grew bleaker Wednesday, when the state Bureau of Revenue Estimates revised revenue projections downward by $309.7 million, requiring emergency cuts to avoid a budget shortfall this fiscal year and ballooning the anticipated deficit for the next fiscal year to $1.6 billion.

Mr. Ehrlich blamed the growing budget shortfall on what he described as the excesses of the administration Mrs. Townsend has served in for eight years.

"Simply put, the Glendening-Townsend administration has embarked on a scorched-earth spending spree, resorting to budgetary legerdemain to conceal its excesses. Now the bill has come due," Mr. Ehrlich said.

Mrs. Townsend said she didn't deserve the blame.

She said the projected budget deficit, which is mostly due to diminishing capital gains, was caused by a sluggish national economy that nobody predicted would last as long as it did.

While the nation was reeling financially, Maryland's economy was in better shape than 45 other states, Mrs. Townsend said. Maryland still enjoyed the highest bond rating possible and a $500 million rainy-day fund, she said.

"Let's put this in perspective. We have a national recession no thanks to the congressman," Mrs. Townsend said, adding that the blame for Maryland's economic troubles rests with Mr. Ehrlich and other Republicans in Congress and the White House.

Mrs. Townsend also said that, while she participated in budget negotiations, she did not agree with all the spending decisions made by Mr. Glendening. She declined to give specifics.

The Baltimore Sun reported yesterday that state Democratic leaders met Wednesday in a D.C. hotel to critique Mrs. Townsend's campaign and to plot strategy for reviving her candidacy.

On the budget, Mrs. Townsend promised a top-to-bottom review and a blueprint outlining how she plans to pay for her education and health care initiatives. She would not give any details other than to say education spending would be "sacrosanct." She would not say when her plan would be ready.

Campaign spokesman Peter Hamm later said Mrs. Townsend's budget would be presented before the Nov. 5 general election.

The budget framework Mr. Ehrlich presented yesterday calls for slot machines, which he called video lottery terminals, at three state horse-racing tracks: Pimlico in Baltimore, Laurel in Prince George's County and Rosecroft in Fort Washington. He estimated the state would reap $380 million the first year from licensing fees and gambling proceeds.

The general fund would eventually net as much as $800 million a year, he said.

The plan's other new revenue sources and cost-savings strategies were more modest.

For example, Mr. Ehrlich would ask agencies and departments to immediately identify efficiency savings within their offices, with the goal of a 1 percent savings. Later, he would seek another 4 percent savings. He also would set up a hot line for state employees to report fraud, waste, abuse and political activities.

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