GBC’s Fry: Turbulence ahead for Maryland�s General Assembly

Don Fry Commentary on WYPR

The relative calm of the recent General Assembly session will surely be contrasted by turbulence and anguish the next time lawmakers meet, whether it will be in a special session this fall or in the 2008 session beginning next January.

Expect contention as legislative leaders begin laying the strategic groundwork to address a projected $1.5 billion general fund deficit, raise up to $600 million more for needed transportation infrastructure, and seek to find more than $300 million to pay for expanding health care access to Maryland’s more than 700,000 uninsured.

A key reason for deferring action on these challenges this year was to give Governor O’Malley an opportunity to find efficiencies and reduce state spending. While the Governor has most certainly set high goals for reducing spending, seasoned Annapolis observers calculate that the maximum amount of achievable savings is not likely to exceed $300 million.

Even if the governor were to identify twice that amount in savings, many would argue that the state still faces a need for a billion dollars in new revenue. And that’s not including new transportation infrastructure that will cost up to an additional $600 million which, for discussion purposes, equates to at least a 12-cent increase in the gasoline tax.

Further, should the state revenue estimates decrease this summer, the stage could be set for a special session in the fall to enact a package of revenue increases to address these fiscal challenges.

Legislative leaders’ tactics for closing the coming budget gap could encompass a slots bill, a sales tax increase, expanding the sales tax to a variety of services, a gasoline tax increase, reducing aid to local governments, or other yet-to-be-determined measures.

This scenario puts the Greater Baltimore Committee and other business advocates in a tough position. Rather than to simply react to these options, we will be challenged to propose viable, proactive solutions that lawmakers can embrace and that will maintain, rather than diminish, the business climate in Baltimore and the state.

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