Maryland May Face $1 Billion Shortfall

During the past year, lawmakers raised taxes on high-income earners and increased the sales, corporate income, tobacco and vehicle title taxes, among others.

This week's letter from Deschenaux -- as well as other recent financial assessments -- have fueled debate over a referendum on legalizing slot-machine gambling that will appear on the November ballot. Legislative analysts project that slots could yield more than $500 million annually for the state within a few years.

The new budget projections "show that the state needs new sources of revenue, and slots would do that," O'Malley spokesman Shaun Adamec said.

State Comptroller Peter Franchot (D), a leading slots opponent, said yesterday that "slots won't solve our fiscal problems. In fact, they'll only make them worse."

Franchot's statement accompanied a report from his office on final revenue collection figures from last fiscal year, which were $73.5 million below forecasts. Franchot referred to the looming potential shortfall as a "financial mess."

Del. John L. Bohanan Jr. (D-St. Mary's), another leading member of the House Appropriations Committee, counseled caution.

"Are we at the point where we have to panic? I don't think so," said Bohanan, who leads a committee that examines how much money the state can afford to spend.

"This is tied to the national economy. We will continue to be fiscally responsible and prudent in looking at this."