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$500 Million in New Budget Cuts Threatened in Md.

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As Maryland's fiscal picture continues to darken, Gov. William Donald Schaefer has warned that he may have to order $500 million in new budget cuts to take effect next month.

The Governor issued the grim forecast last month after complaining that state officials have repeatedly overestimated tax revenues during the current recession.

The cuts would mark the eighth time in two years that Maryland has made mid-year budget reductions. But the latest round could be the harshest yet, due to the size of the projected shortfall and to the already bare-bones funding status of many state programs.

Mr. Schaefer said education will be a prime target in the upcoming cuts, accounting for as much as $200 million of the total. While officials have predicted that local school aid will be reduced, higher education is expected to face even more severe cutbacks.

Legislative leaders immediately denouced the cuts as an overreaction to modest revenue shortfalls. Mr. Schaefer countered, however, that the state has made its budget difficulties more painful by accepting overly optimistic economic forecasts.

The state had predicted a 6 percent growth in revenue this year, but so far has seen no rise in receipts as compared to last year.

Officials have ruled out the possibility of tax increases to bridge the gap and have said that new fees will amount to a minor part of the budget answer.

Mr. Schaefer said in his announcement that layoffs, significant funding cuts, and the closing of some state facilities and agencies are all options. He is expected to announce the list of cuts on Sept. 16.

"This is the most devastating [round of cuts], because there isn't anything left,'' the Governor noted.

Last year, Mr. Schaefer sought to put pressure on the legislature to increase taxes by announcing an austere budget plan that would have laid off state troopers and closed police posts. Lawmakers eventually bowed to the Governor's demands and approved the largest tax hike in the state's history.

While Mr. Schaefer has said he has the authority to order the cuts, a special session of the legislature remains possible after the November elections. Observers anticipate that top lawmakers will be involved in deciding how to make the savings, either by working with Mr. Schaefer as he drafts his plan or in a legislative session.

--Lonnie Harp

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