Comptroller Peter Franchot said he was “inclined” to support more than $300 million in state budget cuts Gov. Martin O’Malley will propose today to the Board of Public Works on which they both serve.
But the two Democrats argued sharply about whether the ballot referendum on slot machine gambling would stave off future budget pain.
“We cannot tax our way out of this recession,” Franchot said. “We cannot continue to borrow our way out of this recession. We most certainly cannot gamble our way out of this financial mess we find ourselves in.
“Come December, we’re likely to have another round of cuts,” said Franchot, who has become the most visible spokesman against slots. “Gambling doesn’t solve our problems. It makes them worse.”
But O’Malley told school superintendents that “one of the big variables” in continuing aid for education is the money from slots, which he proposed last year.
“If those revenues are coming, there are certain things one can do in a fiscally responsible way to bridge to their arrival,” O’Malley said. “If they’re not coming, then there are other things that you are forced to do.”
Under the most optimistic projections for slot machine revenues, the new gaming would not bring in much money for two or three years, but are expected to produce $660 million for a new Education Trust Fund in fiscal 2013.
But a study released Tuesday by four professors with the Maryland Institute for Policy Analysis & Research at the University of Maryland Baltimore County said, “Great uncertainty exists regarding how much revenue this program will provide the state.”
The study said slots might generate only half the amount estimated by the Department of Legislative Services. The researchers said the department’s estimate disregards increased competition from neighboring states that already have slots and also doesn’t fully take into account the loss of lottery sales and sales tax revenues from other spending that could be offset by slots gambling. The study also said the legislative analysts failed to sufficiently account for the social costs of gambling.
The study was funded by a group called StopPredatoryGambling.org, but institute director Donald Norris said the research was “a fair and balanced study based on the best evidence available.”
Based on that study, Franchot said the legislative estimates “are not just overly optimistic. They are pure fantasy.”
Franchot did not propose any substitute sources of revenue but called on the state to comprehensively review state spending.
“We absolutely have to reform state spending,” Franchot said, because the budget has doubled in the past decade.
Few of the cuts the governor is proposing will have a direct effect on local governments or schools, except for community colleges, which will lose $16 million.
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