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As General Assembly begins, use of surplus divides lawmakers

January 11, 2000|By LAURA ERNDE

ANNAPOLIS - Lawmakers will have several options for the state's nearly $1 billion surplus when the Maryland General Assembly convenes today, a budget analyst said Tuesday.

And state forecasters are predicting the money will continue to roll in.

"That's a nice situation to be in," Warren G. Deschenaux, the legislature's budget analyst, told Republican delegates and senators Tuesday.

The influx of cash is largely due to growth in capital gains and state income taxes, he said.

Number crunchers are still working on the details of Gov. Parris Glendening's 2001 budget, which probably will be unveiled next week.

The surplus likely will be used to address any of three major needs, Deschenaux said.

One would be to boost the state reserve fund. If a recession hits, the current 5 percent reserve would only hold for a year, he said.

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Or the state could choose to accelerate a 10 percent income tax cut being phased in through 2002. That comes with a price tag of between $100 million and $300 million, depending on how quickly the cuts take effect, he said.

A repeal of the state's inheritance tax would cost about $55 million, he said.

Finally, the extra cash could be spent on one-time costs to build roads, bridges, schools and colleges.

Members of the Washington County delegation, made up of six Republicans and two Democrats, have said they believe at least some of the surplus should be used on tax cuts.

House Minority Leader Del. Robert L. Flanagan said reducing state debt should also be a choice.

"It wouldn't hurt if you just acknowledged it as an option," said Flanagan, R-Howard/Montgomery.

Sen. Martin G. Madden, R-Howard/Prince George's, pointed out that the state's operating budget also will grow and suggested it's irresponsible for those increases to outpace predicted revenue growth.

"There's a small rolling of the dice, but some believe the economy's doing better than the forecasts suggest," Deschenaux said.

After the briefing, Del. Christopher B. Shank, R-Washington, said he doesn't think the state should rely on the good economy.

"We could be digging ourselves into a hole. It's all predicated on growth in capital gains. What happens if the stock market goes down?" he said.

In addition to the surplus, the state is expected to get millions from the settlement of a lawsuit against tobacco companies.

The exact amount won't be known for months, however, and the amount coming in will fluctuate from year to year depending on inflation and other factors.

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