By Raymund Lee Flandez
ANNAPOLIS – Maryland legislative staff presented a key budget committee with a bleak financial picture Tuesday night, but they’d already expected the worst.
The state’s general fund is projected to be short $590 million this fiscal year and $1.2 billion in 2004, according to officials from the Department of Legislative Services who briefed the state Spending Affordability Committee.
“I think the state is at a crossroads and it’s really important for this committee to set the bar,” said Sen. Barbara A. Hoffman, D-Baltimore, committee co-chairman, at the start of the meeting.
The Spending Affordability Committee, which includes the state’s top lawmakers, is charged with analyzing the state’s fiscal health and setting Maryland’s rate of state spending to assure it does not exceed its economic growth.
This final report is to be submitted by Dec. 1 to the General Assembly for lawmakers to consider when the body convenes in January.
Shrinking revenues and increased spending have put the state in the red.
“It is somewhat worse than we thought,” said Warren Deschenaux, a policy analyst for Legislative Services. Balancing the budget, he said, will require drastic action.
General fund revenues for the state in fiscal 2002 were estimated at $9.6 billion, but fell 3 percent to $9.5 million, the first time the percent change has fallen in the red in more than 15 years, according to the staff briefing. The loss is attributed to declines in personal and corporate income taxes.
This year’s revenue estimate is forecast to be just .8 percent below last year’s $9.5 billion.
State spending is expected to grow by 6.5 percent by 2004 to $11.2 billion — much of it devoted to aid to local governments for education, as well as medical and foster care payments, legislative staff said.
In making these assumptions, the department did not consider a planned one-time state employee bonus and presumed that a hiring freeze would continue through fiscal year 2004.
The forecast, however, does not assume any turbulence ahead, such as potential war in Iraq or a worsening national economic decline.