Maryland Gov. Harry Hughes submitted a $6.4 billion 1984 budget to the General Assembly today that is precariously balanced by $22 million in new taxes, a new lottery and a caveat that some $50 million in popular programs could be in jeopardy if the governor's package of tax increases is not passed in full.
Hughes' budget, which is 4 percent larger than the fiscal 1983 budget, avoids the cutbacks in programs and services that have characterized the budgets of other jurisdictions, including Virginia and the District. But it does not include pay raises for state employes or increases in welfare grants and gives local governments only a slight increase in funding. Hughes admitted today that the budget, which by law must be balanced, has "not much in the way of new initiatives."
The governor, inaugurated for a second term Wednesday, officially outlined his proposals during his annual "state of the state" address to the legislature. The new taxes, including increases of 3 cents on a pack of cigarettes, 25 cents on a gallon of distilled liquor, 10 cents on a gallon of wine and 1.5 cents on a gallon of beer, are likely to be the most controversial.
In the 30-minute speech, a somber Hughes said that Maryland's fiscal condition was "basically sound but gravely threatened" by the economic recession and by the "cold winds" blowing from the national Republican administration.
Hughes' theme was one he has sounded repeatedly in the past. However, this speech was more nuts and bolts, focusing on past accomplishments and the major fiscal problems of the future--the stagnant economy that has drastically curtailed revenues, plus the looming crisis in rapidly rising state pension costs.
Hughes also warned local governments not to complain about the lack of increase in aid this year and suggested that the future may be worse. He indicated that a major revision of the state's income tax structure--forcing higher levels of taxation--may be necessary next year.
The governor's blunt message and stark budget were greeted tepidly by the 188 legislators. Most sat subdued as Hughes, speaking in a flat tone, read his seven-page speech. The only applause came as the governor finished, promising "I won't make another speech this week."
The harshest assessment of Hughes' budget, which the legislature must approve before the end of its 90-day session, came from the Republican leadership. "We're backed into a corner but he's not going to get us out with a bunch of one-time gimmicks and higher taxes," said House Minority Leader Robert R. Neall. "We need to do some definitive things and we need to do them now."
Even among Democrats the budget was controversial. "I don't think some of this stuff is going to fly," said Del. Tyras S. Athey, chairman of the House Ways and Means Committee that will consider all the proposed tax increases.
Athey and others were particularly concerned about Hughes' proposal to shift $29 million from the transportation trust fund into general funds for one year. The legislature last year passed a two-cent increase in the gasoline tax at Hughes' request and many legislators were able to justify their vote back home only by saying that the money was desperately needed for road and bridge repair. Hughes said that repair program will not be affected.
Other elements in the budget that have sparked controversy were: a new Department of Labor, Employment and Training, which Hughes is proposing as part of the price of labor support during his reelection campaign; new budget language on Medicaid funding of abortion that would make it easier for poor women to obtain the operation (a topic Hughes did not mention in his public address); and $51 million in programs made contingent on passage of the new taxes and the lottery.
Among the $51 million are favorities from every jurisdiction across the state, most of which are local aid items. The list of programs includes $8 million in targeted education aid that is given to the poorer subdivisions such as the City of Baltimore (not Prince George's or Montgomery Counties); Eastern Shore necessities such as $186,000 in mosquito control funds; about $398,000 slotted for a new veteran's homes; and $2.5 million allocated to the Maryland Small Business Financing Authority set up last year for minority businesses.
Under Maryland law, legislators can cut the budget they get from the chief executive, but they can't add or transfer anything. If the legislature fails to pass the new revenue-raising measures, Hughes can knock out programs and legislators can do little about it--thus the term that Hughes is holding these programs "hostage." The list was assembled without priorities by pulling out all new programs adopted last year or any programs that must be renewed each year, Hughes said. Revenue-Raisers
Hughes proposed to fund his budget by raising four separate taxes. The state property tax, which is used to pay bonded indebtedness, will be increased by 3 cents, from 21 cents per $100 of assessed value, to 24 cents. The increase would raise approximately $16 million and would cost the owner of a $100,000 home an extra $13.50 a year.
Three other "sin taxes" would raise $22 million. Hughes has asked that the state's cigarette tax be increased from 13 cents to 16 cents a pack, that the distilled spirits tax be increased from $1.50 to $1.75 a gallon, that the beer tax rise from 9 cents to 10 1/2 cents a gallon, and that the wine tax be boosted from 40 cents to 50 cents.
Hughes has also proposed starting a new lottery--called PICK-4--sometime in April. The game would be a variation of the current Numbers Game, which permits the player to chose a combination of three digits. PICK-4 would allow a choice of four digits and is expected to raise $29 million in fiscal year 1984. Education
Public education, which is the largest portion of the state budget, will receive $18.4 million more in next year's budget, for a total appropriation of $2.3 billion. A variety of programs will receive slight increases, including projects for handicapped children, gifted and talented children, disruptive youths and adult continuing education.
Hughes also included $600,000 for a new engineering research center for the University of Maryland designed to focus on high-technology fields. Overall, the university will receive $24 million more next year than this year, but tuition will increase 13 percent.
The targeted-aid program, which was initiated as a one-year program in 1979, will continue to receive $8 million, according to the budget. It is on the list of "hostage" programs. Human Services
The most controversial section of this budget will be the governor's decision to relax requirements for obtaining Medicaid-funded abortions. The abortion-funding language has split the legislature annually, but Hughes, strongly "pro-choice," apparently believes that the newly elected general assembly, which began its four-year term 10 days ago, is more liberal on this issue than was last year's legislature.
Hughes is proposing to spend $1.7 billion on human services next year. He has added $1.3 million for the driving-while-intoxicated program and is increasing jobs in foster care, community services and children's protective services.
At the same time, Hughes decided against increasing the $450-a-month income cutoff used to determine eligibility for welfare. Public Safety
Hughes has included more money for security positions at a variety of prisons, including the Maryland Training Center, a juvenile facility. He also provided $1 million for design of a 1,000-bed prison.
The governor is also asking the legislature to expand the 911 police emergency telephone program to include the entire state. Other Initiatives
Hughes has included $170,000 for a new labor department, which he plans to set up by executive order. It must receive legislative approval.
Hughes also mentioned today, for the first time, the possibility of supporting major reforms in the state employes' pension system during this session. Previously, he had said that he thought it would take at least a year for major reforms in the system, which next year will cost the state $94 million--a 35 percent increase over the current year.