Maryland Gov. Harry Hughes today submitted a $5.6 billion state budget for next year that neither takes nor gives very much. His budget proposal, while calling for no new taxes and amounting to the smallest spending growth in a generation, provides few initiatives and constricts programs in a number of important areas, particularly the social services.
The budget and accompanying State of the State address that Hughes delivered to the General Assembly reflect the dramatic fiscal decline of the once-affluent state government. Where only two years ago the state had a bounty that allowed it to hand out millions of dollars in tax relief and still finance major new programs, today, even with such a modest budget proposal, Hughes and his fiscal advisers say the financial situation is precarious.
The new budget will give state agencies only slightly more to spend, Hughes said, and some will deliver less for their money. "We are in a period of retrenchment," said the governor. "At a time when working men and women of this state are struggling to make ends meet, we in state government, too, must make the sacrifices necessary to live within our means."
Medicaid payments to poor families, already curtailed once this year, will be tightened again under Hughes's proposals. Tuition will rise by an average of 23 percent at state colleges. One hospital will be closed and the opening of another will be delayed. Service agencies around the state will admit fewer citizens through their doors.
Meanwhile, the state's 61,000 state employes and 211,000 welfare recipients will get nothing more, unless Hughes and the legislature find more money in the next two months to fund pay and benefit increases. And a special-need aid program to local school districts begun last year will be abandoned.
Hughes said that he hoped the state's fiscal picture would improve by March, when the final revenue estimates are made for the 1982 fiscal year beginning July 1, supplying him with an additional pool of money to fund the pay raises and perhaps bolster other programs.
As it is, the three-volume budget document shows only a 4.3 percent increase in spending over this year. By comparison, Hughes' initial budget last year ended up being 12 percent higher than the previous year.
In a $2.9 billion slice of the budget devoted to those department programs that have spending levels controlled by the governor, rather than state law, Hughes is calling for an increase of only $15 million, or one-half of one percent. This growth is the smallest proposed since 1962, Hughes said.
Since the bulk of these so-called "general funds" are concentrated in Maryland's health and human resources departments, it was here that Hughes' austere approach was felt most sharply.
"The governor cut where he could, and the areas where he could cut are the areas of human services," said Senate Majority Leader Rosalie Abrams (D-Baltimore City).
While Hughes says he has maintained services for "the poorest of the poor," a wide spectrum of legislators said they feared that limiting assistance to the near poor will cause deeper problems that future budgets will have to address, particularly if the economy does not improve and if the new Republican administration makes major cuts in federal social programs.
The shrunken program figures result from a combination of recessionary pressures on state revenues this year and Hughes' determination not to increase taxes to make up the difference.
In September, the state's Board of Revenue Estimates reported that state collections from the property tax, the income tax, the sales tax and other sources were increasing at a far lower rate than in the past years, largely because of the national economic slowdown. Even after cutting $17 million from the current budget and finding $35 million more that turned out not to be needed in various programs, Hughes managed to increase the projected surplus -- or pool of leftover money available for next year -- to slightly over $100 million compared to the $293 million surplus of last year.
The result is that despite a 6 percent increase in total tax collections, Hughes has $22 million less available to spend in his new budget than he did a year ago.
At the same time, the governor has pledged to avoid a tax increase at all costs, although he has indicated he is considering supporting an increase in some transportation fees or cuts in state aid to local subdivisions if the state revenue picture does not improve by March.
Already, Hughes' has employed several variations of fiscal acrobatics to keep his budget in balance, as required by state law.
In what his aides, describe as "the Christmas Eve heroics," Hughes decided on the last night of his budget deliberations to support a new state lottery game to help cover his Medicaid and social services budget. The new "instant" lottery game, shoved into the revenue list before it was even formally created last week, is expected to bring in $30 million in new revenue in the next 18 months.
Even so, Hughes managed to cover a huge deficit in this year's budget for the Medicaid program only by changing the state accounting system in a way that will effectively put off the payment of $40 million in bills until the fiscal 1983 budget.
And the governor's budget assumes that a task force created last week will find ways to reduce Medicaid spending by another $15 million, before the new restrictions have been formulated or approved.
Finally, the new budget slips so narrowly between available funds and appropriations that Hughes now estimates the state will have a cash balance of only $137,000 at the end of the next fiscal year, June 30, 1982.
This narrow margin has already caused some legislators to argue that the state will face an even worse fiscal crisis next year unless the new budget is cut back even further. Human Resources
This department has whittled down services to the near poor in order to maintain present programs for what Hughes calls the "poorest of the poor." For example, welfare benefits will remain at this year's level, which amounts to the 1969 national standard, even though Hughes has raised Maryland's benefits by 21 percent since taking office. Nonetheless, the state's welfare rolls grew more than 5,000 in the last year, sharply raising welfare costs for 1982.
Virtually all of the cuts were made in programs that serve citizens who live at the margin of poverty -- day care, legal services, in-home services for the elderly and others. For example, the state will cut 264 spaces for children in day care centers -- in addition to hundreds of places cut at midyear -- and limit the remaining spaces mostly to victims of child abuse and neglect and to children of welfare mothers who need day care in order to get jobs. Health
Health services for the poor, the emotionally disturbed and the elderly will be trimmed throughout the state despite an increase in Health and Mental Hygiene's budget of almost $1 billion.
An unexpected $80 million deficit in the 1980-81 Medicaid budget, caused when state officials were surprised by sudden growth in the number of people eligible for the benefits, prompted cuts at midyear and further reductions in Hughes' budget. Hughes said the state will save more that $36 million in 1982 through "emergency regulation changes," which translate into a loss of benefits for citizens who need long-term hospitalization. Still, next year's Medicaid budget shows a $44 million increase.
State health facilities in local jurisdictions will also be squeezed. Most dramatically, suburban Baltimore's Thomas Wilson Center for tuberculosis victims will be closed on June 30, forcing the transfer of patients to a northwest Maryland facility and eliminating 129 state jobs. Transportation
The transportation budget contains a 6.8 percent increase, including $50 million for the Washington Metro system and a 4.5 percent increase in the State Highway Administration, which supervises the construction of roads.
Hughes has reorganized the highway construction program in an effort to avoid increasing gasoline taxes or otherfees for transportation projects, which are funded out of a special trust fund to which various state tax collections are dedicated.
Transportation projects are now divided into a development and evaluation program and an actual construction program. Last fall, Hughes deleted 62 primary and secondary roads projects from this six-year construction plan, angering legislators from around the state who lost one or more pet projects.
The transportation Department will also create 117 new jobs next year for the phase-in of the first leg of the Baltimore subway, and mass transit spending overall will increase by 13.8 percent, in part because of the subway construction and spiraling cost in the Baltimore area bus system, which is owned and operated by the state. Construction
Along with his operating budget, Hughes submitted a $161 million capital budget that included some last minute changes to make room for a $23.7 million dike building project in the port of Baltimore. The dike on Hart and Miller islands represents the state's contribution to the massive harbor dredging project that cleared legal challenges late last month.
Hughes, who along with the Baltimore business community has long championed the harbor dredging as essential to state economic developoment, put off the expansion of a state office building and trimmed $5 million from an economic development bond issue to make room for the dike project.
The budget also proposes 78 other new projects, including:
$6.1 million for plans and construction of a 192-bed medium security building at the House of Correction in Jessup,beginning the renovation program for the aging facility.
$13.2 million in projects at the University of Maryland campus in College Park, including plans and some construction funds for additions to the engineering building and library, and $13 million more in college construction projects elsewhere in the state.
$8.1 million for construction of an 80-bed forensic unit at Clifton T. Perkins Hospital in Howard County to replace the various forensic service units at state regional hospitals with one facility.
$6.2 million for the construction of a new district court building in Baltimore City, which will be used to hear all motor vehicle cases and criminal cases from the city's north andnorthwest areas. Education
Hughes promised that higher educationwould be a priority of next year's budget, and he has responded by requesting $746 million in funds for state colleges and the University of Maryland, an increase of 8.9 percent.
Much of this increase has been funded, however, by increases in students' tuition. At the College Park campus,tuition for undergraduate state residents would rise from $695 to $860 under Hughes' proposal, and from $2,500 to $2,785 for out-of-state residents. The charge per credit hour for part time students would go from $41 to $49.
Meanwhile, salaries for faculty members at state colleges would be limited to an increase of 2 percent.
Education aid to local jurisdictions totals $755 million, a 3 percent increase over last year that was largely mandated by the education package the legislature passed last year. However, Hughes has at least temporarily dropped an $8 million special aid program to local school boards based on need, and the budget does not contain other recommendations of the governor's commission on education. Such as an increase in aid for community colleges. Taxes
In the only tax relief proposal Hughes said that he would like to improve a renters' tax credit program for the elderly and disabled so that $1 million more in additional tax relief would be distributed. Hughes said that the program, which passed the legislature two years ago, was too narrowly drawn and has not reached as many people as was intended.