Expenditures for transportation increased $55,257,000 or 17.0 percent over 1983. This is primarily
attributable to an increase in highway maintenance costs and the operating costs related to the new Baltimore
City subway system which commenced operations in fiscal year 1984.

Personnel and retirement expenditures include costs of all benefits for State employees and social
security, pension and retirement costs for certain employees of local public schools. In general, the increase
in expenditures of $90,727,000 or 21.9 percent over 1983 is attributable to the increase in fringe benefit
costs.

Intergovernmental expenditures increased $103,432,000 or 33.3 percent over 1983. The increase was
primarily attributable to a reclassification of expenditures formerly shown under public safety and judicial for
the payment of local license revenues collected by the clerks of courts on behalf of the political subdivisions.

Operating transfers in of $218,816,000 increased $10,380,000 from the preceding year, and operating
transfers out of $405,601,000 increased $40,463,000 from the preceding year. The operating transfers out
increase of 11.1 percent over the amount for 1983 was attributable to an increase in property transfer tax
revenues used to fund outdoor recreation projects and an increase in the transfer of general funds to the
higher education and university hospital fund.

The general fund unreserved fund deficit at June 30, 1984 was $122,674,000 compared to an
unreserved fund deficit at June 30, 1983 of $102,314,000, a decline of $20,360,000 during the year. This
decline was the result of a planned reduction in the budgetary fund balance and changes in the timing
differences between budgetary practices and generally accepted accounting principles.

Differences in accounting treatment between generally accepted accounting principles and the legally
mandated budget have usually produced an adverse effect upon the general fund operating results and fund
balances when they are reported under generally accepted accounting principles. Changes in the differences
between 1984 and 1983 were attributable to an unanticipated growth in the dollar amount in expected areas
rather than to an increase in the number of departures in the budgetary system from generally accepted
accounting principles.

Management of financial resources is exercised through the legally mandated budgetary system of the
State. As planned, the budgetary system produced a positive general fund balance at June 30, 1984. For
further information on these differences, see footnote 3 to the financial statements.

The special revenue unreserved fund balance of $162,404,000 increased $44,492,000 over the
preceding year because of significant increases in motor vehicle taxes and fees revenues and in the corporate
income tax revenues, a portion of which is used for transportation activities. The debt service unreserved fund
balance of $527,489,000 increased $53,010,000 from the prior year. This increase, which is consistent with
prior years, is occurring to meet future debt service requirements.

Debt Administration

The ratio of net bonded debt to assessed value and the amounts of bonded debt per capita are
considered to be useful indicators of the State's debt position to State management, citizens and investors.
Data for fiscal years 1983 and 1984 are shown as follows:

		Ratio of Met
		Bonded Debt
	Amount	to Assessed	Ratio of Debt
	(expressed in	Value (52.1% of	to Present	Bonded Debt
	thousands)	Present Market)	Market Value	Per Capita
General
obligation bonds:
1983	$2,409,890	4.61%	2.47%	$557.97
1984	$2,314,315	4.08%	2.13%	$531.54

Additionally, outstanding limited obligation bonds of the Department of Transportation amounted to
$776,485,000 at June 30, 1984. Debt service on these bonds is provided principally by excise taxes levied by
statute. Self-supporting revenue bonds outstanding at June 30, 1984 were $986,815,000. Long-term

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