- The Washington Times - Friday, February 15, 2008

ANNAPOLIS — Maryland lawmakers yesterday returned their focus to their primary work during the legislative session — passing a balanced budget. And the task is expected to become tougher as they await a revenue forecast that could open a new budget gap between $100 million and $200 million.

“We don’t have the revised economic forecast yet, but it’s reasonable to expect they’re going to be more pessimistic than the ones we were using a few months ago,” said Warren G. Deschenaux, the General Assembly’s chief budget analyst.

Mr. Deschenaux said he expects to recommend that lawmakers find at least $100 million for the current budget but would not speculate how they would do that or what his policy shop would recommend.

“It’s really too early to say,” he said.

House budget gurus say the downturn in home prices and the resulting downturn in retail spending and home-construction spending is driving the state budget problems, and that nobody has found the end of the problem.

“The essence of good financial management is being able to deal with the unknown,” said Delegate Murray D. Levy, Southern Maryland Democrat. “If you can’t do that and you can’t think your way out of [budget problems], you’re not going to survive.”

Booming home sales in 2005 and 2006 helped buoy the state economy, even resulting in a temporary budget surplus, although the recent downturn has done equal damage.

Mr. Levy, who serves on the House Appropriations Committee, said lawmakers already plan to cut $100 million out of the budget and that, depending on how revenue estimates look next month, they could cut another $100 million.

The state relies on a mix of sales, income and gas taxes, along with lottery revenue to balance its budget. Budget analysts pay close attention to how well each source does to make determinations about whether to cut spending.

Although revenue forecasts should give analysts an indication of what cuts will need to be made, they will not provide a clear picture of the state’s largest income source: revenue from the personal income tax.

“If they look weak and we need to take some action, we can’t just sit around on our thumbs praying the income tax does better,” he said.

Comptroller Peter Franchot is expected to release the updated revenue estimates early next month.

Gov. Martin O’Malley, a Democrat, has proposed spending $31.6 billion in his fiscal 2009 budget.

Mr. O’Malley already trimmed $550 million from his proposed budget in the form of education cuts and eliminating vacant state jobs, although he also increased spending on transportation, higher education and health care.

Lawmakers raised $1.4 billion in taxes and added a measure to approve legalizing up to 15,000 slot machines during November’s special session of the General Assembly.

The three-week-long session was designed to close the long-term state budget shortfall but still left a gap of about of about $300 million in the budget.

Mr. O’Malley has proposed papering over the current $300 million gap with reserves, but he has not elaborated how he would fix the gap in continuing years.

“All you can do is be prudent and try to conserve your resources,” Mr. Levy said.

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