626 ADDRESSES AND STATE PAPERS

tional in State aid for public safety reflected the first effort by any
state to recognize the crisis of crime in the streets and to provide direct
dollar assistance to city and county law enforcement agencies. Authori-
zation to use for the first time a major alternative revenue source,
the income tax, has enabled seven subdivisions to reduce property tax
rates and allowed fourteen others to hold the line.

However, all Marylanders must realize some hard facts about fiscal
reform. The tax increase was principally for the benefit of the sub-
divisions. This means that the State government must continue to live
within its income — an income that has not substantially increased
because of declines in other revenues.

The situation, while bleak, is not desperate, but it does demand
attention and responsible action. The 1969 Budget reflects this action.
While it is not austere — in relation to meeting new needs — it is
characterized by economy and guided growth.

The administrative and legislative programs I shall propose today
reflect a belt-tightening posture.

MARYLAND'S ECONOMY

We can afford to meet our pressing and essential problems. The
state of our overall economy is good. This is evidenced by the follow-
ing factors:

Maryland's gross State product — the total value of all goods and
services — increased more than a half billion dollars during the past
year. It rose to $13. 9 billion, the highest in Maryland's history.

Personal income increased at a rate of 7. 4 percent in 1967, well
ahead of the national average.

Despite an appreciable nationwide decline in construction starts,
industrial growth brought $91. 8 million of new capital investment to
Maryland during the first 11 months. This provided 3, 000 new jobs
and an estimated annual payroll in excess of $20. 3 million.

The size of our civilian labor force increased 3. 7 percent, and the
percentage of unemployment remained at a relatively low 2. 9 per-
cent compared with the national average of 4. 3 percent.

FALTERING REVENUE RECEIPTS

Paradoxically, while these figures show a healthy and strong econ-
omy, the revenue estimates on which the new 1969 budget is based
present, at the moment, a less encouraging picture. This results from
the one soft spot in our economy — the nationwide slowdown in con-
struction, which the Comptroller tells us may cause the sales and