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Good times not good for all

Morose Schaefer casts pall over rosy budget outlook

Friday, Dec. 16, 2005

The Board of Revenue Estimates, a three-member state panel that provides the governor a forecast of collections for taxes and fees, predicts that Maryland’s economy will dash through 2006 and 2007, thanks to income and job growth.

But the rosy outlook contrasted sharply with Schaefer’s contention that the figures belied deep problems with poverty.

‘‘You’re giving me too much of an optimistic view, and I don’t like it. ... I haven’t heard what you’re going to do for the poor,” Schaefer (D) said Wednesday afternoon.

‘‘What I’m seeing is not what I’m hearing.”

He rambled through an inventory of dark clouds: rising retiree health costs, increasing prescription drug costs, the lack of affordable housing and inner-city crime.

Schaefer turned to Gov. Robert L. Ehrlich Jr. (R).

‘‘You have done exceptionally well. I’m not supposed to say this, but you have been a great governor,” he said. ‘‘ ... But more has got to be done for poor people.”

The report, however, focused more on the state’s wealthy, not the state’s needy.

General fund revenue — mostly from income and sales taxes — is expected to grow to $12.2 billion, or 7.1 percent, in fiscal 2006, which ends June 30. In the next financial year, growth will slow but remain at a respectable 5.2 percent, bringing in $12.8 million to the state, according to the 50-page report.

Several factors are fueling the increases in state revenue.

For one, Marylanders are bringing home fatter paychecks. Income tax revenues will climb 8.5 percent in FY 2006 and 6.7 percent in 2007.

For another, the housing boom is fueling increases in sales tax revenues and capital gains. Sales taxes are expected to reach $3.3 billion in fiscal 2006 — a 6.4 percent increase — and $3.5 billion in 2007, a 5.1 percent boost.

Capital gains, which are counted with the income tax, are predicted to jump 30 percent during the 2005 calendar year and 11 percent in 2006.

The number of jobs will grow as well. Nearly 51,000 jobs will be added in 2006 — to more than 2.6 million — and more than 41,000 in 2007. And many of those jobs will come from Base Closure and Realignment Commission actions, which are expected to add 20,000 new jobs to the state.

The major caution in the report was the uncertainty over whether energy prices would brake a chugging economy.

The forecasts are included in the report from the board, which comprises Schaefer, Treasurer Nancy K. Kopp (D) and Budget Secretary Cecilia Januszkiewicz. Each year the board presents the forecast to the governor, and Ehrlich will use the figures as one of the underpinnings of the budget blueprint he will present to the General Assembly by Jan. 18.

At the State House meeting of the board, the comptroller seemed as grim as if he had just been visited by the Ghost of Christmas Future. He attributed his mood to a visit two weeks ago to a homeless shelter at Spring Grove Hospital in Catonsville.

The shelter, run by Baltimore County, is contained inside trailers on the hospital’s property. Schaefer said he was unhappy with how the men had to sleep on the floor in their clothes with meager bathing and cooking facilities.

After the visit, the county pledged improvements, expanding from a seven-hour-a-day operation to a 24-hour shelter.

The visit apparently hit close to home. Schaefer related to reporters a story about a mentally retarded man who sold handkerchiefs in his Baltimore city neighborhood.

He said he used to try to avoid him.

‘‘But suppose the ball bounced a little differently? I’d have been that guy, and he would have been me,” Schaefer said.

The comptroller had been in a particularly sour mood for most of the day. He spent the morning at the Board of Public Works, relentlessly questioning State Highway Administration officials over contracts.

‘‘There’s something lacking here, but I can’t put my finger on it,” Schaefer said.

He fired off a number of questions over a pair of contracts in which two engineering consultants could be paid up to $500,000 on an as-needed basis. Schaefer expressed suspicion that the money would be spent unwisely and without accountability.

At one point, Januszkiewicz stepped in to defend the practice: ‘‘I think we need to trust our state employees.”

‘‘Oh, come on!” Schaefer replied.

On another contract, Schaefer could not understand why procurement officials did not question why a losing bidder on an SHA contract was so much higher than the winning bidder, casting doubt about state spending.

‘‘We worry about every penny,” Januszkiewicz said.

‘‘When did that start?” Schaefer asked.

‘‘January 2003,” she replied, when the Ehrlich administration took office.

After the Revenue Estimates meeting, the 84-year-old comptroller reflected on his state of mind.

‘‘Why am I on a high horse?” he said. ‘‘Because I’m sad. ... The Bible asks, ‘Am I my brother’s keeper?’ The answer is, ‘Hmmm.’”