Fight brewing over budget surplus

December 10, 1997

Fight brewing over budget surplus


Staff Writer

Maryland lawmakers will be faced with an intriguing luxury when they begin their annual legislative session in Annapolis next month - a budget surplus of hundreds of millions of dollars.

What to do with that windfall, which it's estimated will reach $850 million when the state's fiscal year ends next June 30, likely will fuel a General Assembly battle over proposed tax cuts, school construction spending and maintaining the state's financial health.

"If there's an $850 million surplus, there's going to be 850 million suggestions on how to spend it," said Sen. Donald F. Munson, R-Washington, a member of the powerful Budget and Taxation Committee.


The surplus in the state's $15.5 billion budget is the result of strong economic growth in the state, which has pushed tax revenues higher than expected. The legislature also has been squirreling away millions of dollars to boost the state's cash reserves as a cushion for a time when the economy sours.

The so-called rainy day fund is expected to stay between $350 million and $450 million, an amount expected to permit the state to keep its AAA bond rating, which allows money to be borrowed at low interest rates.

Last week House of Delegates Speaker Casper R. Taylor Jr., D-Allegany, proposed adding about $85 million to the reserves, with another $265 million going toward a modest property tax cut and spending on projects like education, prisons and roads.

Several local lawmakers said if there is to be more spending, it should be for one-time expenditures like schools and roads, and not for new programs that will cost more each year.

"If we spend money, we've got to make sure the spending of the money doesn't incur future spending," Munson said.

Del. Sue Hecht, D-Frederick/Washington, a member of the House Appropriations Committee, said additional road funds are needed for local projects like the Halfway Boulevard/Interstate 81 interchange and the Interstate 70/Interstate 270 interchange in Frederick, Md.

Munson said he would be willing to consider accelerating the tax cut passed by the legislature last year, which reduces income taxes 2 percent a year for five years.

He warned that any surplus spending should be done with caution, and mindful of the recession of the early 1990s when the legislature had to pass budget cuts and tax increases to make up for a $1 billion budget shortfall.

"No one wants to go through that again. That was a horrible time," Munson said.

Del. D. Bruce Poole, D-Washington, the newly appointed chairman of the joint Audit Committee, said he is concerned that an election-year fervor to spend money for pet projects could mean trouble when the next recession arrives.

Poole suggested that the bulk of the surplus go toward building reserves, to as much as double the current amount, so that the state is prepared for the inevitable economic downturn in the future.

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