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  •   Glendening Seeks Budget Increase

    By Charles Babington
    Washington Post Staff Writer
    Sunday, December 27, 1998; Page B01

    Maryland Gov. Parris N. Glendening next month will recommend the state's biggest budget increase since 1992, citing a robust economy in which government revenue continues to outstrip expectations.

    Glendening (D) and Democratic leaders in the General Assembly say such a spending increase will be prudent and affordable. Much of the money, they say, will go to one-time expenditures, such as building facilities for public schools and universities, and tackling the Year 2000 computer problem.

    Republican leaders, however, say the Democrats' spending plan almost kills any hope of further tax cuts, which they contend the public deserves. Some also say more revenue should be set aside to cushion the blow of an eventual drop in the economy.

    "They're saying, 'If we've got it, let's blow it,' " said Del. Robert H. Kittleman (R-Howard), the House minority leader. GOP lawmakers – a distinct minority in the House and Senate – plan to take issue with the spending proposal when the General Assembly convenes Jan. 13, he said.

    Republicans note that the Democratic spending plan would allow the state budget to grow faster than the growth in personal income. Personal income historically is a key bench mark that legislators use to plan budgets.

    Government economists predict a 4.9 percent growth in Marylanders' personal income in 2000. But the state's Spending Affordability Committee last week voted to allow the fiscal 2000 budget to grow by 5.9 percent. The committee, controlled by Democratic legislators, makes non-binding recommendations on fiscal policies.

    Glendening, meanwhile, has signaled that he will recommend a spending increase of about 6.5 percent when he introduces his budget proposal Jan. 21, according to legislative analysts working with his staff. The General Assembly can cut, but not add to, the governor's budget recommendations.

    Legislative leaders and Glendening aides say it's prudent to let budget growth somewhat outstrip personal income growth in fiscal 2000, which begins July 1. For the last several years, they note, personal income growth has outperformed government expectations, resulting in budget surpluses. The state's general fund balance "could exceed $233 million when fiscal 2000 begins," according to a recent report by the Department of Legislative Services.

    Moreover, state revenue projections have underestimated the dramatic growth in capital gains – and the taxes they generate – prompted by the strong stock market in recent years. The Maryland budget can grow by more than 6 percent and still leave a cushion for unexpected problems, the administration says.

    The last time the Maryland budget grew by more than 5 percent in one year was in 1992, when lawmakers approved a 10 percent spending increase.

    "The governor's feeling is that right now our economy is doing very well," Glendening press secretary Ray Feldmann said. "We have millions of dollars in reserve. . . . We ought to take this opportunity to invest in programs that are going to pay big dividends in the future."

    Without offering particulars, Feldmann said the budget proposal "will reflect the governor's priorities," especially "public education, higher education, 'smart growth' and economic development." Smart growth is a program designed to curb suburban sprawl by steering new development to areas already developed.

    State workers can expect a flat-sum pay boost similar to this year's, when full-time employees received an extra $1,275, Feldmann said.

    He said Glendening will steer much of the new spending to single-shot projects rather than ongoing programs that must be financed annually.

    "He's talking about school construction and these one-time capital projects that won't burden the budget" in future years, Feldmann said. "It will be a prudent, fiscally responsible and balanced budget."

    Republican leaders, however, say it is unwise to let the government's new spending outpace the growth in personal income, even if past revenue projects have been too conservative.

    "We think it's a big mistake," said Del. Robert L. Flanagan (R-Howard), the House GOP whip. "This is setting us up for the same types of problems we had in the early '90s, where if the economy doesn't continue to excel, we will be forced to make cuts, which will be very painful."

    Flanagan said the state should put more money into reserve funds "or enact tax cuts, which would strengthen the economy for more difficult times."

    Glendening, during his reelection campaign, floated the idea of using budget reserves to accelerate an income tax reduction that's partly in place. Half of the planned 10 percent reduction took effect this year, but lawmakers have another four years to implement the rest.

    Since then, the governor has said little about tax reductions. Feldmann said in an interview: "It would be clear to anybody that the governor's first priority is that we fund programs in education and higher education at levels that will bring about significant, positive change."

    © Copyright 1998 The Washington Post Company

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