Gov. Harry Hughes has told department heads to prepare budgets for next year that increase only slightly over current spending.
Despite the message, administration officials said they are optimistic that the fiscal 1985 budget, which is being developed now for implementation next July 1, may not be as tight as in past years because of a rebounding national economy could mean more money for state coffers.
In letters sent to each agency 10 days ago, Hughes gave cabinet secretaries targets for preparing requests for the fiscal 1985 budget. The targets permit as much as 6 percent growth in small departments and about 3 percent in the large ones, such as Human Resources.
Because inflation is now so low, the growth targets provide some "breathing room," as one department head put it, for the first time after several years of high inflation.
Hughes told agency heads that the new targets should allow them "to fund existing programs, staff new facilities and implement legislation enacted by the 1983 General Assembly."
Last summer, facing higher inflation levels and a depressed national economy that helped cause a downward trend in tax receipts, Hughes told departments that they could increase their budgets by no more than 3 percent. Last fall, Hughes cut that increase in half for some departments and told others to return unspent money.
The gloomy outlook, coupled with unexpected state pension costs, forced Hughes to propose a fiscal 1984 budget during the last General Assembly session with several new tax increases and provided no annual wage increase for state employes.
While administration officials do not rule out tougher times to come this fall, they say that fiscal 1985 should be easier than its recent predecessors--if the economy continues to improve and 1983 budget cuts do not force departments to ask for extra funds.
Hughes aides say that an easing of budget problems would likely mean more money for Chesapeake Bay revitalization, for welfare recipients who did not get an increase in payments this year and for state employes.