ANNAPOLIS – Maryland Gov. Parris N. Glendening may face resistance from the General Assembly over his plans to spend some or all of $62.7 million in surplus 1997 state revenue.
Lawmakers expressed concern that long-standing programs begun with a one-time tax gain may falter if the extra revenues are not duplicated in later years.
“You shouldn’t build an ongoing program that’s started with a surplus,” fretted Del. Howard “Pete” Rawlings, D-Baltimore. Any possible outlet for that money, he said, “needs to be a one-time expenditure.”
Maryland’s windfall reserves are spoils of a nationwide economic surge that bolstered state income tax revenue by eight percent and capital gains by up to 25 percent, said Marvin Bond, spokesman for the comptroller’s office.
Ray Feldmann, Glendening’s deputy press secretary, described the state as “at a unique time in this decade as we come out of a recession period. Not only do we have $60 million in revenues, but the governor has…socked money away.” He referred to a $28.9 million addition to the state’s $532 million “rainy day” fund, set up to avert tax increases in lean years. The Office of Budget and Management projects another $63.6 million for the fund in fiscal 1998.
The unexpected dollars allow Glendening to spend on the children’s initiatives without damaging the state’s high credit rating by incurring new debt, Feldmann said.
“Without doing anything whatsoever to jeopardize our triple- A bond rating, we can invest in programs that will benefit children in some way,” he said. “The investment will pay dividends for us” when the children grow up to become successful adults, he reasoned.
Proposals Glendening is considering include improving schools, offering pre-natal assistance to low-income mothers and providing comprehensive health insurance coverage to all Maryland children up to age five.
But Rawlings, while acknowledging that the governor’s plans may be well intended, said the state has more pressing fiscal needs.
“We’ve instituted a personal income tax reduction [of 10 percent over five years] that will create some substantial deficits in the future,” he said. “It would be very prudent for us to lay aside at least $30 million or $40 million of the windfall to make sure those deficits can be closed.”
Rawlings gave little credence to Feldmann’s claim that the governor’s budget will balance even with the tax cut.
“In the out years, that’s not true,” he asserted. “He knows it, we know it, the whole world knows it. In the third and fourth years, we will have substantial deficits.”
Like Rawlings, Sen. Barbara Hoffman, D-Baltimore, chairwoman of the Senate Budget and Taxation Committee, said she is wary of spending the money for anything more than one-time expenditures.
“I generally don’t like to spend windfalls,” she said. “You set yourself up for a problem in the future. We don’t want to use money that we’re not sure is replicated.”
Hoffman conceded that there are some expenses she wouldn’t mind covering with surplus revenues, particularly in an emergency situation, such as the Pfiesteria outbreak killing fish and raising public health concerns on the Eastern Shore.
“It depends on how generous [the governor] wants to be,” she cautioned. “I definitely wouldn’t want to see the whole thing built into the budget.”
Feldmann demurred on the specifics of the governor’s 1998 budget plan, but maintained that the children’s programs’ goals are elemental to Maryland’s future. And he acknowledged that cooperation with lawmakers and executive officials is necessary. “We’ve laid out a broad vision” of children’s initiatives, he said. “We’re still trying to put some of the specifics together on some of these programs. It’s premature to talk about dollar figures just yet.” -30-