Carroll Towns Brace For Era Of Austerity Slowdown In Growth Signals Lean Times Ahead

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

In the last 10 years, Carroll County has evolved from a mostly rural outpost on the edge of the Baltimore metropolitan area to one of Maryland's fastest-growing suburban locations.

The evidence of the 1980s expansion is all around -- nearly 12,000 new homes, hundreds of new businesses and dozens of new roads took the place of cornfields and cow pastures in many parts of the county.

And while it forever changed the landscape of Carroll County, the last decade's heady growth also forever altered the scope -- and expense -- of Carroll's nine governments.

The rising population -- up 30,000 to 128,000 -- has required more government services, but the rush of people has also brought with it an influx of wealth -- wealth that so far has allowed town, city and county budgets to keep growing year after year.

Those days of ever-rising property values, endless construction of new homes and the expansion of businesses, experts say, could be coming to an end.

Indeed, after a decade that saw the county's assessable tax base -- a measure of the value of Carroll's homes, businesses and farms -- jump from $821 million to more than $2.1 billion, economists, budget experts and county and municipal officials are bracing for what could become years of austerity.

"I'm concerned by any downturn," said Stephen D. Powell, director of the county's Office of Management and Budget. "And many economists are now telling us to stop looking forward to a recession, because it is already here."

One of the biggest indicators, economists say, is the drop in construction and building activity.

And that drop translates into fewer dollars in property tax revenues for town, county and state governments.

For most of the year, the number of new residential building permits has been about the same as last year. But nationally, housing starts are down, construction activity is down and, obviously, the growth in the property tax base eventually will come down.

The U.S. Commerce Department recently released figures showing housing starts at their lowest levels in eight years, dipping to an annual rate of 1.13 million during August, from 1.6 million in January. August marked the seventh straight monthly decline in housing starts, the Commerce Department reported.

And while Carroll's building permits surged ahead of last year's pace in August -- the month's 203 permits brought this year's total to 1,229, compared to the 872 recorded in the same period last year -- many here still predict a slowdown.

Property tax revenue accounts for anywhere from 28 percent to more than 40 percent of revenues for the county's town governments. If the tax base grows more slowly, so will the amount of money governments can expect to spend.

"In times of recession, prices of homes don't increase as much and people don't get as big of raises," Powell said. "Property tax and our share of state income taxes are the two biggest chunks of our budget."

No one in Carroll is panicking over the current economic slowdown, but just about all budget officials admit that should the recession last several years, they will have a much harder time crunching numbers and making them work.

"We don't want to overestimate the problem right now," said Manchester Mayor Elmer C. Lippy Jr. "We're still in an area that is economically healthy. But any dip in growth means we have to look at ways to cut our expenses wherever we can."

Carroll County is not alone in the current economic slowdown -- home building permits statewide are down nearly 1 percent, and down by almost 4 percent in the Baltimore region.

According to the state's Department of Planning, residential building permits in Maryland totaled 21,670 through the end of July, down from the 21,834 recorded in the same period last year. In the region, the number of permits through July was 9,612, down from 10,003 in 1989.

That could translate into a potentially damaging slowdown in the growth of the assessable tax base, which, in Maryland at least, has grown by more than $4 billion a year since 1980.

State revenue lost to a construction slowdown could be made up by an increase in the income tax, in sales tax or in excise taxes.

To places like Manchester or Westminster or any of the state's municipalities, making up lost property tax revenue is not so easy.

"The property tax is the primary source of income for municipal governments in Maryland," said Jon C. Burrell, executive director of the Annapolis-based Maryland Municipal League. "Any downturn in the building market will be a bigger hit on the cities and towns than it will be on the state or the counties."

Maryland municipalities are no different from the majority of their counterparts nationwide. While some big cities -- like bankruptcy-bound Philadelphia -- are able to impose their own income taxes, most localities are able only to levy property taxes.

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