they have no control in a system which tends to place heaviest bur-
dens upon those localities with the least capacity to pay for them. We
have estimated that this program will entail an additional State ex-
penditure of $9, 056, 758 for fiscal 1962. And as the Committee has
pointed out, this is no "one-shot" proposal, and the cost of additional
aid to local governments will rise from year to year as the costs of
these local governments increase.

As I stated to you in the opening address to this Assembly, it is my
belief that to act responsibly in governmental financing we must
balance every decision to spend with a decision to tax. Sound financial
management requires a level of revenues to meet the level of ex-
penditures.

The sound management of our State is best reflected by the ex-
perience the Board of Public Works had at 10 o'clock this morning
when we sold to a syndicate of bankers a $20 million issue of State
bonds at a rate of 2. 718 per cent—lowest since 1956.

To continue this policy of responsible management of the State's
business, and to discharge what I consider to be my responsibility as
your chief executive, I am recommending a revenue program to de-
fray the costs of this plan. After consultation with the leadership of
this Assembly and with my own fiscal advisers, I have selected as
the best revenue resource to meet these additional expenditures the
reduction of the base of the sales tax to 25 cents, together with
levying at the same rate a tax on prepared foods. If effected by next
June 1, these modifications will yield revenues sufficient to pay for
the program recommended by your committee on taxation and fiscal
matters.

It should be pointed out here that, among the states which impose
such tax, Maryland stands near the top in the number of items it
exempts and the amount of the exemption from the sales tax. And
we are the only state levying a sales tax which exempts food.

The adoption of this modified revenue program to aid Baltimore
City and the counties will, I believe, assure a balanced budget for
fiscal 1963 without the necessity of further taxation, provided, of
course, the need does not arise for substantially increased spending,
which I do not foresee at this time.

You will observe that the budget which I am presenting to you
calls for total appropriations of $506, 110, 475 and general fund ap-
propriations amounting to $240, 226, 591. These figures are exclusive
of the expenditures I have recommended to implement the program

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