ANNAPOLIS – President Bush’s economic stimulus package could add $100 million to $150 million to Maryland’s $1.2 billion deficit for fiscal 2004.
That’s in addition to the estimated $500 million deficit for the current 2003 fiscal year.
The Senate Budget and Taxation Committee received word Thursday from Director of Policy Analysis Warren G. Deschenaux that if the Bush stimulus program is approved, lost revenues to the state could go as high as $150 million.
Bush’s plan would eliminate taxes on investment dividends, among other things.
There would be no impact to Maryland’s current, 2003, fiscal budget because legal restrictions protect it from any impact.
Deschenaux said if the stimulus package is approved, Maryland will have to adopt new laws to accommodate the program.
Despite the growing financial problems, the committee is anxious to begin working on what Chairman Ulysses Currie, D-Prince George’s said will be a “difficult session.”
“Come sine die (adjournment), we will put together a balanced budget, maintain our AAA (bond) rating and keep core programs.”
The state’s favorable bond rating allows it to sell bonds at the lowest interest rates available, thus lowering the amount it has to repay.
Gov.-elect Robert Ehrlich will release his budget Jan. 17, but the committee promised that won’t be the final answer to the deficit.
“I don’t want any word getting out that what you see on the 17th is what you get,” said Vice Chairman Patrick J. Hogan, D-Montgomery. “We may be required to make additional cuts or other changes.”
Cuts to programs will depend on how much new revenue the state can raise. The Spending Affordability Committee recommended using $650 million in new revenue and $650 million in cuts, Hogan said.
The committee previously set the state spending increase at 2.5 percent.
Senate Minority Leader J. Lowell Stoltzfus, R-Somerset, said Ehrlich will rely on revenue-increasing measures he has already discussed to alleviate a substantial amount of the deficit.
While Hogan said he was, “extremely excited” to challenge the deficit, he added, “No one is excited about increasing revenues,” which likely would mean tax and fee increases, or Ehrlich’s proposal for slot machines at race tracks.
“I have voted for one tax increase in 28 years. I didn’t want to have to again,” said Sen. Donald F. Munson, R-Washington. “My constituents don’t like slots and my constituents don’t like tax increases.”
However, with this budget situation, Munson said he believed the budget couldn’t be balanced solely by cuts.
“We have got to be able to cut budgets without cutting away core essentials. We accomplish nothing if we close hospitals, for instance,” Munson said.
Until Ehrlich announces his budget, senators will not know exactly what to cut, said Hogan. “The ball is definitely in his court.” – 30 – CNS-1-9-03