Maryland Gov. Harry Hughes is considering a small increase in the state's property tax, holding instant lotteries and taking other economic measures to offset a projected $61 million shortfall in next year's budget that state officials blame on the sluggish national economy.
Hughes said he would decide whether to raise the property tax by a penny or two, which the governor can do without legislative approval, or initiate other methods for raising money, after he receives new revenue estimates sometime in the next two weeks.
He said current analyses by his staff, which is drafting the fiscal 1984 budget for submission to the General Assembly in January, show that the state is facing a "very tight budget, comparable to the one two years ago" when a wide variety of cutbacks were put into effect. At best, Hughes said, he expects a "stand pat budget" with few new programs or innovations. By law, the governor must submit a balanced budget to the legislature.
According to Ejner J. Johnson, Hughes' chief of staff, a 1-cent increase in the state property tax, which now is 21 cents per $100 of assessed value, would bring in an extra $5 million dollars. According to H. Louis Stetler III, Hughes' budget chief, such an increase would add $4.50 to the tax on a home assessed at $45,000, which would have a market value of about $100,000. (The bulk of the property tax in Maryland is levied by counties.)
Johnson said an instant lottery, which Hughes has supported in the past despite a dislike of them, would bring in about $8 million to $10 million.
Other options under consideration, Johnson said, include transferring money into general spending accounts from the transportation trust fund, shifting some federal money from federal programs into state ones, and using other bookkeeping devices to use some federal funds next year that are actually allotted for the year after.
Even with these measures, Johnson said, the budget Hughes submits to the legislature for the fiscal year that begins in July may not include money for state employe raises, targeted education aid for poor localities, increases in welfare benefits or enhancement of black state colleges.
"Right now I don't think anything [new projects or items that need annual renewal] is a sure bet," Johnson said.
Johnson said that such programs would be financed in the budget submitted in January or in supplemental budgets in February or March if revenue estimates show that the economy has improved and more money is coming into state coffers.
Budget officials said the fiscal problems are caused by a sluggish economy that has scared away many consumers, which in turn has sharply reduced the amount of sales-tax collections.
Sales-tax collections account for about 22 percent of the $3.2 billion general fund, and after the income tax, are the largest source of state revenue. Budget officials had projected sales tax revenues would increase by 6 percent over last year, but they rose only about 2 percent. In addition, investment income has been lower than expected.
"Harry Hughes is dealing with a recession that has been inspired by Ronald Reagan's cutbacks, that's how we look at it," said Johnson. "It's an era of retrenchment for all state governments."
Budget director Stetler said an active Christmas shopping season could improve the revenue picture, but he conceded, "We're not very optimistic. The sales tax for the month of October was lousy."
The state's budget woes are further complicated by a smaller than usual projected surplus, about $18 million, from this year's budget.
In the past, Maryland enjoyed surpluses as high as $300 million that were used to help offset shortfalls.
Expecting budget problems, Hughes three weeks ago instructed his cabinet to trim budget requests for next year by 1.5 percent.
Earlier, Hughes had told the cabinet to prepare 1984 budgets that included a 3.3 percent increase in spending over the current year.