One Southern Maryland official's prediction about the 2003 General Assembly session seems prescient now.

As state lawmakers convened in Annapolis in January, Charles County Commissioner W. Daniel Mayer (R-La Plata) observed, "This is not a year to ask for anything new."

Elected officials and others in Calvert, Charles and St. Mary's counties have been taking stock of what emerged for the area from the session that was being characterized by many observers as a stalemate between the Democratic-controlled legislature and Gov. Robert L. Ehrlich Jr., the state's first Republican chief executive in more than 30 years.

The struggle over Ehrlich's proposal to legalize slot machine gambling -- which ultimately failed to win legislative approval -- left the state budget crisis to fester until the final hours of the session Monday night. On the morning after final adjournment, the governor's threat to veto part of the legislature's tax package left Southern Maryland officials to wonder about the final outcome of their two universal priorities: funding for the Hughesville Bypass and other road projects and money for schools.

Del. Van T. Mitchell (D-Charles) said the state gave Charles County $4.8 million to continue the Hughesville Bypass project, fulfilling the county commissioners' entire request for a project considered important for the entire region.

Mitchell said the funding would help keep the $50 million project "on track." The project was funded despite the fact that Ehrlich cut $150 million from the state's transportation fund and $102 million from the highway user fees that the state gives county governments to improve local roads, Mitchell said.

"I think we were very fortunate to keep the funding there," he said, although the money still could be derailed by events in Annapolis.

Mitchell said the funding would go toward setting up utilities along the highway. An additional $40 million to actually build the highway has yet to be found, Mitchell said. It will come from either the federal government or the state, he said.

Other Charles leaders said they were happy to see some state funding materialize in a year marked by the ongoing state budget crisis.

"The bypass has to be built if we have to go down there and cut the trees ourselves," Mayer said.

The General Assembly gave Calvert County approval to issue up to $7.26 million in bonds to pay for capital projects, but the county's delegation rejected the Calvert commissioners' request for the authority to impose a new real estate transfer tax.

And though the county will not know for sure about state funding until after Ehrlich decides whether to veto the tax package, it appears that the state will continue to reimburse the county for revenue -- an estimated $6.1 million annually -- lost from its biggest taxpayer, Calvert Cliffs Nuclear Power Plant, because of electric utility deregulation.

"I've got no complaints," Calvert Commissioners President David F. Hale (R-Owings) said Tuesday. However, he added: "I would prefer we had the option for a transfer tax."

Local officials in St. Mary's County are girding themselves for cuts in funds allocated for public works, education and other services.

"Our sense is that we're looking at significant cuts in education, specifically for teachers' salaries," said Thomas F. McKay (R-At Large), president of the St. Mary's County Board of Commissioners. "It's likely, yes, there will be some cuts in school construction and certainly in transportation."

At the commissioners' meeting Tuesday, McKay blamed any fiscal problems the county may have on "the fiscal mismanagement of the legislature over the past several years." He also referred to "the burden our legislators have posed," which he said would harm small and medium-size businesses in the county.

"The budget proposal which the legislature has approved passes the fiscal mismanagement of the legislature over the past several years down to the citizens of St. Mary's County," McKay said.

Cuts resulting from the legislature's failure to legalize slot machines at state racetracks, McKay said, will "probably impact locally our rescue squad and other nongovernmental agencies, education and law enforcement."

But McKay could not say precisely what these cuts would be. "We only have a sense of it," he said. Added Commissioner Larry Jarboe (R-Golden Beach), "We're just dealing with things day to day, dealing with our [own] budget process."

If Ehrlich follows through on his veto threat, he could summon the legislature back into session to make the necessary cuts or, more likely, leave that chore to the Board of Public Works, consisting of the governor, comptroller and state treasurer.

Such cuts will force adjustments in the local budgeting process. Charles public schools spokeswoman Katie O'Malley-Simpson said the district based its budget projections for next year on receiving $8.8 million in state funds resulting from slot machine revenue, which is no longer an option.

"If we receive less than that, we'll have to adjust our budget accordingly," she said. School officials, O'Malley-Simpson said, have no intention of cutting programs. But new initiatives, such as additional pupil personnel workers, may not come to pass.

Some of the Southern Maryland agenda in Annapolis did not involve money. Local legislation adopted included:

* Allowing Calvert to issue real estate tax credits for members of volunteer fire and rescue companies.

* Permitting Calvert to amend the Length of Service Awards program to allow fire and rescue volunteers who are injured on duty and seeking workers' compensation benefits to keep accumulating points in the program.

* Approving a Charles County plan to increase the maximum cash prize for bingo in the county from $ 1,000 to $ 5,000 and to raise the limit on daily prize money from $ 5,000 to $10,000. The bill was an effort to let local charities keep pace with others around Southern Maryland.

* Granting St. Mary's authority to borrow up to $24.5 million to build, improve and developer public facilities during fiscal 2004 and 2005. The new bond money will cover the county's share of projects underway, such as the $23.6 million renovation of the James A. Forrest Career and Technology Center in Leonardtown and the $23.4 million renovation and addition to Margaret Brent Middle Scholl in Helen. It would also go to other park, road and building projects.

School construction funds are particularly tight, since the state announced in November it could allocate only $56 million of $306 million requested by the counties and Baltimore. Of the nearly $6 million St. Mary's sought for seven school projects, the state said only $3.4 million would be allotted for two projects in fiscal year 2004.

State Sen. Roy P. Dyson (D-St. Mary's and Calvert) said he hopes the county will use its newfound borrowed money to match additional state bond money designated by the legislature for school construction.

School officials are finding themselves squeezed by both state and county governments. Dan Carney, chief financial officer for St. Mary's schools, said the school district asked for $58 million in county funds, but the commissioners have cut that by $2.5 million.

Coupled with possible reductions in state revenue -- including grants for teacher salaries and caps on the teachers' retirement fund -- Carney said his worst-case scenario would force him to slash $8 million from the school budget.

Another factor adding to financial uncertainty in St. Mary's County schools is the war in Iraq. The school district received federal aid from the Education and Defense departments for students in military families. But Carney said that the district has not yet received $350,000 from the Defense Department for this year, and the federal Education Department is mulling over changes in eligibility that could further slash the funding.

Calvert County Public Schools Finance Director Gordon Smith is waiting to see the details of the state budget and the effects of any vetoes. "We're pretty much on hold until all of that is defined for us," he said.

The uncertainty over funding is also hanging over teacher contract negotiations in St. Mary's and Charles counties. In Charles, talks have been delayed. In St. Mary's, discussions continue, but Carney noted, "It's difficult to negotiate when we don't know what our revenue is going to be."

Staff writers Michael Amon and Theola Labbe contributed to this report.

State Senate President Thomas V. Mike Miller Jr. is awash in confetti at the end of the session.Gov. Robert L. Ehrlich Jr., with Lt. Gov. Michael S. Steele, has threatened to veto some new taxes, raising the possibility of further budget cuts for local governments.