ANNAPOLIS – The General Assembly has approved a $21.6 billion budget for fiscal 2003 that preserves a promised income tax cut and leaves a $774 million shortfall looming for next year’s lawmakers.
The plan, approved Thursday by both the House and Senate, caps months of budget trimming and wrangling that began late last year, when lawmakers learned that the state was facing a shortfall of more than $1 billion.
Despite the shortfall, lawmakers refused to negotiate on the final 2 percent of a multiyear, 10 percent income tax reduction that was scheduled to take effect this year. Gov. Parris N. Glendening had originally planned to cancel it to help shore up declining revenues.
While they preserved the income tax cut, lawmakers are expected to approve a 34-cent increase in the tax on a pack of cigarettes, a measure that is expected to bring in an additional $100 million next year.
Much of the cigarette tax will go toward the first year of a six-year school aid plan that could ultimately add $1.3 billion to local school funding. About $15 million of the cigarette tax will go toward construction of a public policy building at the University of Maryland, Baltimore County.
The budget also manages to increase funding for the University System of Maryland by 2.6 percent. Lawmakers were able to fund increases in higher education and environmental programs, two priorities of Glendening.
“We’re obviously very pleased about the budget,” Glendening said. “They restored almost $46 million to higher education, leaving us with just about everything we requested.”
Glendening spokeswoman Raquel Guillory said that about two-thirds of the money initially cut from the governor’s environmental programs has been tentatively restored in capital budget negotiations still in progress.
The governor’s success may have come from his threat to veto some funding bills if his concerns weren’t met. Such a veto would have thrown the budget out of balance and forced lawmakers back to the table.
In order to fund the tax cut and other programs left out of Glendening’s original budget request, lawmakers whittled away at programs and hiring costs.
Lawmakers cut state employees’ raises, voting instead to give workers a one-time bonus in January. Another program that got trimmed was a grant to help private schools pay for textbooks. It was cut from $5 million to $3.75 million.
Lawmakers avoided other cuts to fund a $100 million Medicaid deficit by plugging in $73 million in one-time funds from a tobacco settlement account.
Budget negotiators said they did the best with what they had.
“There is no way to wipe out an over $1 billion deficit in a year,” said Sen. Barbara Hoffman, D-Baltimore, the Budget and Taxation Committee chairwoman.
But others said more could have been done, noting that structural deficits grew by $7 million in the deal-making between the House and Senate and that more spending proposals are likely before the end of the legislative session Monday.
With those additions — such as the school reform measure that is partially unfunded in 2004 — the difference between the state’s spending and revenue will be well over $800 million, said Senate Minority Leader J. Lowell Stoltzfus, R-Somerset.
“We didn’t do nearly enough (in cutting),” he said.
Sen. Thomas Bromwell, D-Baltimore County, agreed that there is still work ahead on the budget, but that the 2003 plan is a good start.
“We’re not out of the fire yet, but we’re out of the flaming holes,” Bromwell said.