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State Comptroller Peter V.R. Franchot pointed out headlines involving the federal government takeover of Freddie Mac and Fannie Mae as signs that even bleaker times are ahead for the economy and the passage of slot machine gambling is not going to solve the state's budget problems.

Speaking Monday morning in Rockville at the Committee for Montgomery board meeting, Franchot (D) predicted the state is going to face the exact same budget crisis as it did last year.

The federal takeover of Freddie Mac and Fannie Mae shows that the mortgage crisis is deeper than many expected and is going to have long-term effects on the economy, he said.

"We used to think of ourselves in Maryland as somehow special and immune [from economic downturns]," Franchot said.

In Annapolis, the same people who sold passage of higher taxes at the November 2007 special session as a way to solve the more than $1.5 billion budget shortfall are now the same people saying slots will solve the next $1 billion projected shortfall, Franchot said.

He called slot machine revenue a "fiscal fairytale."

Franchot did not provide specifics on the state's revenue estimates that are expected to be released Tuesday.

But Franchot said the administration should appoint a "blue-ribbon" panel to look at where the state can cut spending instead. Franchot declined to suggest potential cuts.

During the question-and-answer session, Ellen Bogage, a Committee for Montgomery board member, said former Gov. Robert L. Ehrlich Jr. (R) had appointed a blue-ribbon panel to find savings in state spending.

"They found there wasn't much to cut," Bogage said. "What makes you think there is?"

Ehrlich's panel looked at it in a piecemeal fashion, Franchot said.

"As a proud liberal Democrat, I look at it that government should work," he said. But Franchot said he believes saving could be found throughout the state.

Instead of focusing on the long-term issues, however, the state's leaders are putting all of their focus on slots, Franchot said.

"It's so sad to me to see how much time our leaders spend on this issue," Franchot said.

Franchot called the special legislative session last year as the wrong approach to solving the problem. Instead of rushing to try to solve the budget shortfall, Gov. Martin O'Malley (D) should have followed the example set by former Virginia Gov. Mark Warner. When faced with a similar budget crisis in his state, Warner spent a year examining taxes and spending to come up with a bipartisan consensus, Franchot said.

"We must be honest and say we'll have a budget deficit with or without slots," Franchot said.

Franchot also said he would oppose any efforts to raise the state's borrowing limits to pay for capital projects.

"The time for quick fixes is over," he said. "The time for winks and nods in the backrooms of Annapolis is over."