Gov. Harry Hughes said today that he will probably have to support somekind of fee or tax increase this year if he is to include a pay raise for state workers in nexts year's strained budget.
Hughes' statement came following a report from the Board of Revenue Estimates, which calculates state tax revenues, that only $7 million more in funds are available for the $5.6 billion budget under review by the legislature than there were when Hughes released the budget in January.
Hughes submitted the budget to the General Assembly without including the employes' pay increase or two other items he deemed high priorities -- an increase in welfare benefits and an $8 million education aid program. Since then, he has been saying that he hoped to pay for the rasies and education aid through an upturn in state tax collections, which have sagged below expectations through most of the last year.
With the report of the estimates board today, however, the governor's hopes for a relatively easy solution to the funding problems disappeared. "It means I'm going to have to make some decisions now," he said, "about what, if anything, I'm going to do."
The governor did not committ himself to finding funds for any of the additional programs, but said he had "not given up" on what he has named as his first priority, the pay raise for state employes. In order to propose such an increase, he added, he would have to support "some kind of package" in the legislature that most likely would include increases in transportation fees such as the gasoline tax or increased assessments on trucks using state roads.
Although he did not rule out funding an increase in welfare or in the education program, Hughes said that the pay raise "would seem to be the limit of what we can do," He said he was "much less optimistic" about paying for the other items.
Both Hughes and legislative leaders expressed some surprise at the new state revenue estimates, which are drawn up by the state comptroller, treasurer, and budget director and attempt to predict how much the state will take in from this month until June 1982. The figures agreed upon by the estimates board were some $30 million lower than estimates prepared last month by the legislature's fiscal staff.
The governor is bound,however, by the more conservative revenue estimates board figures, and by law can include no more money in this budget than the board predicts the state will take in.
The figures showed that the state sales tax -- the second largest source of revenue for general state programs -- has been growing at the slowest rate in a generation, and the board estimated that collections will be even lower than predictions last fall, when sagging revenue predictions prompted Hughes to slash the current state budget and increase state spending in the new budget by the lowest percentage since 1963.
In the last two weeks, the House Appropriations Committee has recommended some $58 million in additional cuts in the new state budget, and its members today cited the new estimate figures as further justification for their work. "What we've done this year is tame compared to how it will be next year if this revenue picture continues," said Del. Frank Robey (D-Baltimore), one of the panel's subcommittee chairs.
Hughes, however, refused to back off from his opposition to many of the recommended cuts, despite the new revenue figures. "I don't have any different feelings because the cuts I've asked them to restore really are essential," Hughes said.
Although Hughes has said that he expects to win many of his battles on the budget in the Senate, which so far has taken a far more moderate position on program cuts, the governor and various factions in the House have been battling on the House floor for the last two days to restore some of the cuts made by the budget committee.
So far, opponents of the cuts have had mixed results. Hundreds of relatively noncontroversial reductions had been approved by this evening, but there had been compromises on several items. In one case, the committee was forced to back down on a proposed cut of fire protection aid to Baltimore City by the combined pressure of Hughes, city delegates, and members of the House leadership.
Another controversial reduction of $9 million in welfare benefits to poor families was approved by the House with little debate, but only because its opponents, among them Hughes, plan to attack legislation that must be passed before the cut can be made. In fact, some proponents of the welfare reduction were already conceding defeat on the issue today.
Meanwhile, Senate leaders, though somewhat irritated by Hughes' public confidence that he will have his way with them, have been generally critical of the House cuts and say they will refuse to go along with many of them when the budget reaches the Senate floor. That means that the budget-cutting battles are likely to come to a head when a House-Senate conference committee is formed late in the session.