WHILE LOCAL LEADERS in and around Washington are responding to difficult financial prospects with varying amounts of political courage, Maryland Gov. Harry Hughes -- whose books have looked relatively flush in comparison -- already is preparing his constituents for new sacrifices in the name of continued fiscal stability. Foremost on this list is the possibility of an increase in the state property tax. Also possible is some bad news for state employees--a pay increase next year is unlikely.
These are hardly grounds for public celebration. But as part of a prudent response to a dim financial outlook, at least they are up-front proposals aimed at preventing some ugly surprises for taxpayers down the road. Better to set forth the unpleasant options now, rather than to try to shuffle dwindling funds from one corner of a budget to another until disaster can no longer be covered up.
There are certain money transfers that could help, as Hughes' administration officials are pointing out: the transportation trust fund might be tapped for general spending, certain federal funds can be switched from federal programs to state programs, and various bookkeeping devices can permit spending of federal funds next year that actually are allotted for the year after. Even with these quick-fix moves, Maryland still is likely to be looking at unusually tight budgets--with a possible $61.5-million revenue shortfall next year.
As for the property tax, the governor can raise it statewide without legislative approval. Officials estimate that a 1-cent increase in the rate, which now is 21 cents for each $100 of assessed value, would bring in an extra $5 million. They note that a 2-cent increase, for a total of $10 million more, could be coupled with spending cuts, instant lotteries (which Gov. Hughes dislikes, but which could bring in about $8 million to $10 million) and other adjustments to offset the potential shortfall.
There's always a chance that the national economic picture will brighten and shine a little light on the states in the form of higher sales and income-tax yields. But Gov. Hughes, whose financial management of the state has been impressive so far, is wise not to bank on any immediate miracles.