Budget Officers Say They're Wary But Not Worried -- Yet

October 07, 1990|By DARREN M. ALLEN | DARREN M. ALLEN,Staff writer

Recession. Just mention of the word brings back memories of a decade ago, memories as vivid as double-digit inflation, rampant unemployment and a stagnant national economy.

And to those whose job it is to run Maryland's cities, towns and counties, the dreaded R-word brings with it an almost automatic fear of revenue shortfalls, service cutbacks and tax increases.

"When things slow down, the less growth you have in your taxable base," said R. Eugene Curfman, Carroll County's director of finance. "That, in turn, means less money will be created, and that gives us much less to work with."

All signs -- at least those viewed by county, state and national economic experts -- are pointing toward a winter of economic discontent.

Housing starts are at their lowest levels in nearly eight years, inflation has jumped to its highest level in nearly a decade and the rapid growth seen by Carroll County and the rest of central Maryland has just about ground to a halt.

But municipal number-crunchers aren't getting worried -- yet.

"Hopefully, the downturn won't affect our revenues enough to make us have to restructure our budget," Curfman said.

If the last 10 years are any indication, county and municipal governments won't have to restructure their budgets in the wake of less construction, lower growth and higher prices.

Indeed, using the value of the county's homes and businesses as a guide, the 1980s -- replete with two recessionary periods -- were very, very good to Carroll. From 1980 to this year, the tax base here grew from about $821 million to more than $2.1 billion. That is an increase of about 160 percent.

Other economic indicators spent the decade on the upswing. The number of building permits each year grew from 855 in 1980 to 1,329 in 1989, representing an annual growth in new construction from $45 million to $119 million. At the same time, municipal budgets increased, the amount of property taxes collected rose, and population, employment and governmental services edged upward.

That is all beginning to change.

While the state's financial picture is still better than that of many Eastern states, Maryland's budget is about $270 million in the red this year. In response, Gov. William Donald Schaefer has instituted across-the-board budget cuts, a hiring freeze and a cut in some non-essential services.

And while Carroll County has not yet experienced those problems, some are bracing for the rough economic ride that is ahead.

'You're going to see this downturn affecting everyone differently," said David Lampy of the National Civic League in Denver. "Municipal revenues are not completely sensitive to the economy."

Though Lampy's assessment indeed held true through the previous decade's downturns, Carroll budget officials believe that those days could be over.

"Just look at the rise in the gas price," said Manchester Mayor Elmer C.

Lippy Jr. "The economic downturn affects not only those of us who prepare budgets, but also everyone who lives in the town. It's not good news, and I don't see how we would be able to ignore it."

The price of gasoline -- and heating oil -- is only expected to continue upward. And that translates into tens of thousands of dollars in unexpected expenses for government budget makers.

"There is going to be a serious impact on towns with this gas price increase," said Lloyd R. Helt Jr., mayor of the South Carroll town of Sykesville. "Couple that with dropping income taxes and other sources of revenue, and some towns might have to start looking at ways to save money."

What economists call a recession does, the budget officials say, play a role in their spending plans.

"We may come out of it this year without too big of a problem," said Curfman, the county finance director. "But the small problems could compound next year."

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