- The Washington Times - Saturday, January 18, 2003

ANNAPOLIS Gov. Robert L. Ehrlich Jr. yesterday presented the General Assembly with a balanced budget that calls for reducing government spending without laying off state workers, borrowing $400 million from the Transportation Trust Fund and authorizing slot machines at four Maryland racetracks.

True to his campaign promises, Mr. Ehrlich did not recommend increasing the state sales or income taxes, but indicated he has not ruled out a gas-tax increase.

The $10.1 billion operating budget, which Mr. Ehrlich submitted to the General Assembly two days after being sworn in as Maryland's first Republican governor in nearly 35 years, would allot an additional $242 million for education and an extra $128 million for Medicaid in 2004.

Mr. Ehrlich, who had pledged to make the government "live within its means," said his budget is about helping those who need it the most. He has proposed an $11.3 million increase in services for people with disabilities and $11 million more for juvenile services.

"I believe this is a far more common-sense approach to how we run government," he said, stressing the magnitude of the budget deficit his administration inherited a $543.7 million shortfall for fiscal 2003 and a $1.31 billion deficit for fiscal 2004.

He also pointed out that this is the first time in six years that the governor's budget has come in below the limit suggested by the legislature's Committee on Spending Affordability. It also would not dip into the state's $505 million "rainy day" fund.

Lawmakers and county leaders applauded some of his initiatives, including the decision to channel extra money to education.

Sen. Ulysses Currie, Prince George's County Democrat, said the governor had come up with a "pretty good budget."

"We can differ, but the bottom line is we have a $1.3 billion deficit," Mr. Currie said, noting that the governor had eight weeks to develop the budget.

But two of the funding sources proposed by Mr. Ehrlich authorizing slots and borrowing from the transportation fund drew criticism from some quarters.

"I am disturbed by transfers from the transportation fund," said Delegate Maggie L. McIntosh, Baltimore Democrat and chairman of the House Environmental Matters Committee.

"I am devastated," said Montgomery County Executive Douglas M. Duncan, a Democrat who said the governor's plan is a setback to several transportation projects in the county, including the Intercounty Connector and the Metro Purple Line. "He campaigned to support transportation, and now he has gone back on those promises."

Budget director designate Chip DiPaula said that borrowing money from the transportation fund would not affect any projects for two or three years and that the money can be repaid when the economy improves. He said the administration also will explore new funding sources for transportation.

Some advocacy groups said such a plan may not work.

"What this means for the long term is that if there are no new revenues available, we won't have any new investment in transportation," said Steven Lakin, president of Marylanders for Better Transportation.

Mr. Ehrlich said the deficit has resulted from overspending and a "new disregard for spending affordability" by the previous administration.

The new governor presented his budget in the governor's reception room in the State House amid portraits of his predecessors, including Parris N. Glendening.

Mr. Ehrlich's budget would also close a $543.7 million gap in the fiscal 2003 budget by reducing spending on agencies and eliminating a lump-sum payment for state employees, among other things.

The Ehrlich budget would cut 956 vacant positions in the state government, reducing the number of state employees to 79,860. Lawmakers on both sides applauded the plan.

Senate Minority Leader J. Lowell Stoltzfus, Somerset County Republican, who worked on Mr. Ehrlich's budget, said 17,000 more workers are employed in the state government today than eight years ago.

The Republican governor will likely face a struggle in the next few months as he attempts to get the Democratic-controlled General Assembly to approve his plan.

His slots proposal, which would raise an estimated $395 million, has supporters and critics in both parties. Mr. Ehrlich said there is nothing wrong with offering adults a choice to gamble and "the adults downstairs [legislators] will make the right decisions" on slots.

House Speaker Michael E. Busch, Anne Arundel County Democrat and a firm opponent of slots, said that there are some "pretty unpopular topics" the General Assembly will have to discuss as they work on the 2004 budget.

"The citizens of Maryland are going to see there are no easy budget solutions. The governor will have to make some tough choices. I have a lot of questions about slots and the issue of expanding into the gambling industry," he said.

Mr. Ehrlich described the racing industry in Maryland as needing a "shot in the arm." He offered no alternative if the slots proposal failed, saying instead that there would be a "bigger hole" in the budget if that happens.

Democratic lawmakers say there is an alternative to slots: increasing sales taxes and closing corporate tax loopholes. Mr. Busch pointed out that a 1 percentage point increase in the sales tax rate would generate millions of dollars, as would closing corporate tax loopholes.

Mr. Ehrlich said he rejected the tax-increase option. "I would veto any tax increases sales or income tax," he said.

Lawmakers and lobbyists also point out that a gas-tax increase could help fund transportation projects, saying there is a strong push among legislators this year for a gas-tax increase of up to 10 cents per gallon.

But Mr. Ehrlich said such an increase would not go a long way. "A five-cent gas-tax increase gets you $125 million. That's basically maintenance," he said.

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