By Rolando Garcia
ANNAPOLIS – Gov. Robert Ehrlich unveiled his $23.8 billion fiscal 2005 budget Wednesday, boosting public school and health care spending, but sparking Democratic criticism that it hides a structural deficit that will plague the state for years.
Ehrlich touted a record $326 million increase in primary and secondary education funding, a 10 percent bump from the previous year.
He also added $302 million to Medicaid funding, the budget’s second-largest increase.
Also included were smaller initiatives to preserve the Chesapeake Bay and give state employees a 1.6 percent pay raise.
The budget also contains $250 million in spending cuts, but the bulk of the state’s $800 million budget shortfall is plugged with one-time revenue sources.
“This budget is fiscally responsible and also sensitive to people who need government,” Ehrlich said.
Although Ehrlich’s budget includes $180 million in new revenue from the closing of a corporate tax loophole and raising a host of user fees, Ehrlich is resisting calls by Democratic leaders in the General Assembly to solve the state’s long-term budget woes by raising sales or income taxes.
Senate President Thomas V. Mike Miller Jr., D-Calvert, said Ehrlich’s stop-gap measures just push the deficit off into the 2006 fiscal year, when it will hit $1 billion.
“Without a new sales or income tax, (Ehrlich) has to borrow from Peter to pay Paul,” Miller said. “It’s a good budget on paper, but the devil is in the details, and the out-years. You can’t run a government on debt and promises.”
Miller also faulted Ehrlich for not replenishing the $300 million taken from the Transportation Trust Fund last year to cover the budget deficit, although the governor did earmark $25 million as an installment on the debt.
Department of Budget and Management Secretary James DiPaula Jr. said Ehrlich did not support raising the gas tax to replenish the fund.
The budget also cuts $114 million in state aid to local governments.
Sen. Patrick Hogan, D-Montgomery, said these cuts would place a strain on county budgets still reeling from last year’s cuts.
Ehrlich said the budget meets the state’s education funding obligations under the Thornton plan. However the governor excluded $45 million intended to remedy geographic disparities in the cost of education, such as raising teacher salaries in counties with a high cost of living.
The state Attorney General’s Office ruled that portion of funding was not mandatory under the Thornton legislation passed by the Assembly.
House of Delegates Speaker Michael Busch, D-Anne Arundel, said the Assembly would pass legislation to restore the funding.
Ehrlich’s higher education budget, which was flat, also drew Busch’s criticism. The governor’s failure to restore funds slashed last year would force another round of tuition hikes, the speaker said.
And while funding levels for many health and social programs remained constant, Ehrlich’s budget actually amounts to a cut because of soaring medical costs, Busch said.
Ehrlich sharply disagreed.
“There’s a wing of the Democratic Party that isn’t happy without new taxes and thinks that there is never enough spending, but that viewpoint lost in 2002,” Ehrlich said.
Ehrlich also said he would introduce a bill to legalize slot machines that would generate $700 million in revenue annually. The House of Delegates shot down a slots bill last session.
DiPaula said slots, combined with the increased revenue brought by economic growth would improve the state’s long-term budget outlook.
However, DiPaula’s rosy fiscal outlook also contained a stark warning – that Medicaid spending was “out of control” and, unless reined in, would devour the state budget.
Nelson Sabatini, Health and Mental Hygiene secretary, said Medicaid funding nationwide would exceed $600 billion and outstrip Medicare spending within 10 years.
“The current Medicaid program is not financially sustainable,” Sabatini said. “We have to make sure poor people have access to quality health care and assure taxpayers we’re buying health care in the most prudent way possible.”
To preserve the Chesapeake Bay, Ehrlich allocated $98 million to upgrade wastewater treatment plants and reduce levels of nitrogen in the bay. – 30 – CNS-1-21-03