SHORT­FALL:

State fore­sees short­fall of $800 mil­lion, ham­per­ing spend­ing and tax re­lief

Baltimore Sun - - FRONT PAGE - By Michael Dresser mdresser@balt­sun.com twit­ter.com/michaelt­dresser

State bud­get mak­ers will head into de­lib­er­a­tions on next year’s spend­ing plans with $800 mil­lion less than they had ex­pected af­ter the state Board of Rev­enue Es­ti­mates’ pro­jec­tions were re­leased Wed­nes­day, putting a damper on the prospects for in­creased spend­ing or sig­nif­i­cant tax re­lief.

State bud­get mak­ers will head into de­lib­er­a­tions on next year’s spend­ing plans with about $800 mil­lion less than they had pre­vi­ously ex­pected, af­ter rev­enue es­ti­mates were cut Wed­nes­day.

The re­vised pro­jec­tions re­leased by the state Board of Rev­enue Es­ti­mates put a damper on the prospects for more spend­ing or sig­nif­i­cant tax re­lief as Repub­li­can Gov. Larry Ho­gan heads into his third Gen­eral Assem­bly ses­sion in Jan­uary.

The num­bers set off a new round of par­ti­san re­crim­i­na­tions and fin­ger-point­ing, with the Ho­gan ad­min­is­tra­tion blam­ing Democrats, and Democrats ac­cus­ing the ad­min­is­tra­tion of play­ing a blame game.

“Let’s be clear: Mary­land doesn’t have a rev­enue prob­lem,” Ho­gan spokes­woman Amelia Chasse said. “Cer­tain mem­bers of the Gen­eral Assem­bly have a spend­ing prob­lem.”

State Sen. Richard S. Madaleno Jr., vice chair­man of the Se­nate’s Bud­get and Tax­a­tion Com­mit­tee, said Ho­gan is re­fus­ing to take re­spon­si­bil­ity for de­clin­ing rev­enue on his watch.

“He in­her­ited a grow­ing econ­omy and has steered it in a dif­fer­ent di­rec­tion,” the Mont­gomery County Demo­crat said.

Comptroller Peter Fran­chot, who chairs the Board of Rev­enue Es­ti­mates, said the write­down “re­flects the stag­na­tion of our econ­omy.” He em­pha­sized a need for fis­cal cau­tion on spend­ing, bor­row­ing and taxes.

“It’s a tough sce­nario, but we can get through this if we all work to­gether in part­ner­ship,” said Fran­chot, a Demo­crat who has closely al­lied him­self with the Repub­li­can Ho­gan on fis­cal is­sues.

He said the new pro­jec­tions likely mean tax re­lief will be “off the ta­ble” next year.

“Prag­mat­i­cally, it won’t hap­pen, given these de­vel­op­ments,” the comptroller said.

State rev­enue of­fi­cials es­ti­mate that Mary­land will col­lect $365 mil­lion less than ex­pected in the cur­rent bud­get year and $417 mil­lion less for the bud­get law­mak­ers will con­sider dur­ing the 90-day Gen­eral Assem­bly ses­sion next year.

To­gether with a pre­vi­ously re­ported $250 mil­lion short­fall for the bud­get year that ended June 30, the state faces a more than $1 bil­lion rev­enue gap for the three­year pe­riod.

The short­fall go­ing into next year’s bud­get could be al­le­vi­ated par­tially if the Board of Pub­lic Works de­cides to trim spend­ing for the cur­rent year.

An­drew M. Schaufele, ex­ec­u­tive sec­re­tary of the rev­enue board, told mem­bers the weak tax col­lec­tions largely re­flected a slow re­cov­ery and slug­gish gains in Mary­lan­ders’ earn­ings de­spite im­prov­ing em­ploy­ment num­bers. He said the jobs Mary­land’s econ­omy has been gain­ing lately have dis­pro­por­tion­ately been low-pay­ing, tem­po­rary po­si­tions.

Bud­get Sec­re­tary David R. Brink­ley said the num­bers un­der­score the need for one of Ho­gan’s top pri­or­i­ties: re­lief from the min­i­mum spend­ing re­quire­ments the leg­is­la­ture has writ­ten into state law.

Ho­gan’s of­fice said the new num­bers are a “stark re­minder” that the state will con­tinue to have bud­get prob­lems as long as the leg­is­la­ture’s Demo­cratic ma­jor­ity balks at adopt­ing “mean­ing­ful spend­ing re­forms.”

Madaleno dis­missed the idea that eas­ing spend­ing man­dates would solve the state’s bud­get chal­lenges. “When the ad­min­is­tra­tion talks about man­date re­lief, what a Mary­lan­der should hear is ‘we want to cut ed­u­ca­tion and health care,’ ” he said.

If the gov­er­nor wants to spend less than the amounts man­dated for pro­grams next year, he would have to ask the leg­is­la­ture’s per­mis­sion through a bud­get rec­on­cil­i­a­tion act. But the num­bers set the stage more for con­fronta­tion than rec­on­cil­i­a­tion.

Chasse urged law­mak­ers to join in a “com­mon-sense ap­proach to spend­ing.”

“From day one, Gov­er­nor Ho­gan has worked to rein in spend­ing and en­act fis­cally re­spon­si­ble mea­sures to put Mary­land on a se­cure path, and to this day his ef­forts have been fought tooth and nail at ev­ery turn,” she said.

But Democrats in the leg­is­la­ture pointed to fig­ures show­ing that the cur­rent year’s bud­get was pro­jected to be $363 mil­lion in the black when they left An­napo­lis in April. Now, it’s fore­cast to be $28 mil­lion in the red.

“To say the leg­is­la­ture is the prob­lem is just wrong,” said Del. Mag­gie McIn­tosh, who chairs the House Ap­pro­pri­a­tions Com­mit­tee. She said law­mak­ers have had no im­pact on the bud­get since the ses­sion. “This is what the gov­er­nor does — blame some­body else and never take re­spon­si­bil­ity,” the Bal­ti­more Demo­crat said.

McIn­tosh also ex­pressed scorn for Fran­chot, whom she de­scribed as Ho­gan’s “lit­tle side­kick.”

She said “the new Repub­li­can comptroller” hasn’t got­ten rev­enue pro­jec­tions right for three out of the last five years.

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