Maryland has accumulated a $320 million windfall in tax collections and other revenue, according to figures released yesterday, prompting state leaders to begin jockeying over how to spend the extra money.
The pot of cash appeared as state accountants closed their books on the fiscal year that ended June 30. It comes on top of a $274 million budget surplus that state lawmakers had anticipated--and doled out--during this year's legislative session.
The windfall is mostly the product of a flood of tax revenue that exceeded analysts' projections. In announcing the surplus yesterday, the state comptroller's office said the Maryland income tax, sales tax and even the tobacco tax have yielded much more money than expected.
Lawmakers had no problem coming up with a long list of ways to divvy up the giant surplus, which can be used for virtually any purpose, from building a rainy day fund to construction projects to tax cuts.
Gov. Parris N. Glendening (D) said he'd like to use the money to build schools and pay for campus improvements at community colleges and state universities.
"We should continue our ambitious commitment to school construction so that we can provide our students and teachers with state-of-the-art schools equipped with the most modern technology," he said.
Lawmakers already have allocated $165 million for school construction from previous budget surpluses. Some legislators said they were willing to spend even more on schools, but others said the windfall should be used to defray the cost of a growing list of expensive transportation projects.
Although Maryland's treasury is overflowing now, transportation officials say the state could face a multimillion-dollar shortfall a few years from now when it comes time to pay for some pricey highway, bridge and mass transit projects, such as a new Woodrow Wilson Bridge over the Potomac River and improvements to Baltimore-Washington International Airport.
Transportation needs are so pressing that some lawmakers have talked openly about the possible need to raise the state's 23.5-cent-per-gallon gas tax or its 5 percent sales tax. But as Maryland's general budget surpluses continue to grow, such proposals would be increasingly hard to sell to the public, legislators acknowledged.
"We have transportation needs, but with the economy booming, the public is in no mood for a gas tax increase," said Senate President Thomas V. Mike Miller Jr. (D-Prince George's).
Miller said he'd like to use the surplus to pay for school and road construction projects. But he added that he also favors some modest tax cuts, such as a reduction in the state inheritance tax.
Republican legislators, who are in the minority in both the House of Delegates and the Senate, said they'd love to use the surplus to finance tax cuts but doubt that Glendening would agree.
"I'm sure the governor is not going to support a tax cut--he's made that very clear," said House Minority Whip Robert L. Flanagan (R-Howard). "So I'm looking for a consensus. It's important that we work with the majority party to reach an agreement."
The next best thing to tax cuts, Flanagan said, would be to spend the surplus on transportation projects to avert the need to raise the gas or sales taxes. "Let's compromise and use the budget surplus for transportation," he said.
Michael Morrill, a spokesman for Glendening, said the governor is indeed opposed to using the surplus to finance new tax cuts. He noted, however, that Glendening would like to use some of the windfall to pay for a gradual reduction in state income tax rates that has been approved by the General Assembly.
Morrill said Glendening is preparing a plan to deal with the projected state transportation budget crunch and is expected to announce details in the next few weeks.