- The Washington Times - Monday, January 26, 2004

ANNAPOLIS — The Maryland legislature’s chief fiscal adviser told lawmakers yesterday that Gov. Robert L. Ehrlich Jr. substantially underestimated the cost of programs such as Medicaid and mental health services in the $23.8 billion budget he submitted to the legislature last week.

At a briefing for House and Senate budget committees, Warren Deschenaux, director of the legislature’s Office of Policy Analysis, also said the budget uses “a rather ambitious assumption” of how much additional revenue the state will collect next year from corporations that set up holding companies in Delaware to shield some of their revenue from Maryland taxes.

Mr. Deschenaux’s estimate was $40 million less than the $64 million Mr. Ehrlich used to help balance the budget for next year, which included a slender surplus of $2 million.

James “Chip” DiPaula, Mr. Ehrlich’s budget secretary, said the governor believes his estimates of how much the state will spend and collect in revenues are accurate.

“We’re trying to be very realistic,” he said.

The analysis by Mr. Deschenaux was the first detailed explanation for legislators of how the governor overcame a projected revenue shortfall of $900 million or more and submitted the balanced budget required by the state constitution.

Mr. Deschenaux said cuts in state spending made up only $240 million of the solution to the fiscal problems. The rest consisted of revenue increases, cuts in local aid and diverting money for programs such as park and open space acquisition to pay for general government expenses.

Most of the spending cuts and new revenues used by Mr. Ehrlich to balance the budget are one-time fixes that will not help with future budget problems.

Delegate Norman Conway, Wicomico Democrat, said with all the steps taken by the governor this year to balance the budget, the state will still be looking at a revenue shortfall next year of about $800 million.

“The fact that we are not addressing the structural deficit [for the future] really bothers me,” he said.

Sen. Patrick Hogan, Montgomery Democrat, had similar concerns. “We’re no further ahead than we were a year ago,” he said.

In his analysis, Mr. Deschenaux estimated the state will have to spend $35 million more on the Medicaid program than the money included in the budget by Mr. Ehrlich.

Mr. Hogan said he was not surprised, because that happens almost every year.

“It’s a bipartisan practice to underestimate how much Medicaid is going to cost,” he said.

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