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It is déjà vu all over again for the Maryland state government. Another session of the Maryland General Assembly is looming ahead. Another huge budget deficit faces the state.

The bad news is that the recession has caused Maryland's general fund revenue to plummet in fiscal 2009. The worse news is that the state Board of Revenue Estimates has just revised downward its revenue projections for 2010 and 2011.

The board projects revenue of $12.3 billion for the current fiscal year of 2010, about $683 million below previous projections. This amounts to a 4.5 percent decrease from revenues for fiscal 2009, which were already 4.8 percent less than 2008. In simple terms, revenues have plummeted by nearly 10 percent in just two years.

For fiscal 2011, the board expects revenues to rise by a less-than-expected 3.4 percent to $12.7 billion, well below the $13.5 billion collected in 2008 and far less than what the amount needed to balance the budget, which is required under law. According to estimates by the Maryland Budget and Tax Policy Institute, the state faces "approximately a $2 billion shortfall in the 2011 budget."

But the news gets worse yet. These estimates do not factor in potential costs from federal health care reform. Unless lawmakers substantially repair the bill drafted by Senator Max Baucus (D-Montana), Maryland could face increases in the costs of its Medicaid and Children's Health Insurance Program that Washington will not fully fund.

The only health care reform that offers substantial fiscal relief to the states and to businesses is a single payer system with the federal government assuming the costs. However, policy-makers in Washington lack the courage and wisdom to move in this direction.

The original sin that combined with the recession to cause the perfect storm that wrecked the Maryland budget was the special session on budget issues held in 2007. A special session is the wrong way to deal with fundamental issues and this gathering of the legislature was no exception.

The lawmakers never took at comprehensive look at state spending and on the revenue side relied primarily on an increase in the regressive sales tax. They also swallowed the fairy tale that the state would reap more than $600 million a year in new revenue by bringing legalized slot machine gambling to Maryland.

The Maryland slots location commission has so far approved only one license for a slot machine facility. This license, which the commission approved this week, enables the owners of the owners of the Ocean Downs racetrack on the Eastern Shore to install 800 slot machines at their facility, less than a third of the number authorized at the site under state law.

To put the 800 slot machines into perspective, we should remember that the state's revenue estimates depended on installation of 15,000 machines at locations across the state. According to an article by John Wagner in the Washington Post, the next bid likely to be evaluated by the state proposes to install 500 machines in Cecil County, with a possible expansion to 1,500. "Other bidders," Wagner reports, "face obstacles that could delay operations past planned openings in 2011 or sink the bids altogether. The problems include a zoning battle and questions about the bidders' finances."

Forget about the mirage of slots easily and painlessly pouring huge amounts in our state's coffers. At best, revenue from slots will be long delayed and will amount to much less than promised by lawmakers.

Here are the two critical initiatives that he governor and the General Assembly ought to take on the budget next year, but probably won't. First, officials need to conduct a systematic analysis of the budget to make substantive decisions about what to cut and what to retain, rather than resorting to ad hoc and stopgap expedients. Second, lawmakers should close the huge tax loopholes that enable big corporations to pay little or no state tax.

A survey this month by Gonzales Research and Marketing Strategies underscores the problems that lawmakers face on the budget. Seventy-five percent of Marylanders believe that the state's budget issues are "a very big problem." Yet substantial majorities also oppose both new taxes and cuts in programs such as education, aid to the poor and environmental protection.

Maryland lawmakers will have to display both courage and leadership in next year's session. Whether they can do so in an election year is an open but vital question for the people of Maryland.

Allan Lichtman is a professor of history at American University and a national political analyst. His e-mail address is lichtman@american.edu.