Fund shortfall, debt service cool Howard's fevered ways

November 30, 1990|By Norris P. West | Norris P. West,Evening Sun Staff

The good times for Howard County government spending could be over.

For years, the county has been the model of prosperity. Its fast-growing population had an increasingly larger government that delivered a panoply of services and programs about which officials often boasted.

Now the prospects of its continuing are dimming in the wake of a projected $18 million revenue shortfall.

County Executive-elect Charles Ecker promises to slash spending and cut services. He is considering layoffs and whether to audit the county's finances to see if the fiscal problems run even deeper.

How prosperity suddenly turned to crisis is a key question in the county. There are several opinions.

Government officials blame the woes on an external force -- the sagging regional and national economy that has resulted in less tax revenue from personal income and development.

But opponents of County Executive Elizabeth Bobo have said for months that her borrowing habits eventually would dig Howard into a budgetary hole, and now they say the county's hefty debt has contributed to the specter of a deficit.

Ecker, who is to be inaugurated Monday, says the county should have used the surpluses it accumulated in recent years to pay the debt, which has reached $160 million.

Councilman C. Vernon Gray, D-3rd, argues that the county's debt is not responsible for the financial problems.

"I don't think we've been borrowing that much," Gray says. "We have to spend money to pay for some of the capital projects in the county. By law, our debt cannot exceed 12 percent of our assessable base and we'reonly around 4 percent. So I think we're doing very, very well with our debt structure."

However, even county officials admit that the 12 percent limit imposed by the charter is broad. And the county pays a higher percentage of its general operating fund on debt service than its neighbors do.

Guy Hager, executive director of the Baltimore Regional Council of Governments, says of Howard's debt: "I haven't analyzed that recently, but four or five years ago when I first looked at it, I thought it was a little high. But you have to realize that Howard County has been a fast-growing jurisdiction with a lot of infrastructure needs."

Hager says the near future looks bleak in Howard because the slumping economy and a growth cap have shut down development in a county that has depended on tax money from new construction to pay the bills.

He says other jurisdictions in Maryland also face fiscal problems, including Baltimore and Prince George's counties. Carroll County announced this week it is facing a $2.5 million shortfall.

But some counties are faring better, according to their budget officials.

Howard spends nearly 10 percent -- $286.4 million -- of its current budget to pay principal and interest charges on the $160 million debt.

That contrasts sharply with Harford County, another rapidly growing jurisdiction with about the same number of residents. Harford has relied far less on borrowing in recent years, says county budget analyst Norma Kershner, who says her county does not expect a revenue shortfall.

Kershner says Harford avoided going into debt in recent years, counting more heavily on "pay-as-you-go" projects, which means it undertakes those efforts only if it has enough cash to pay for them.

While Howard's debt has climbed from $113 million in 1985, Harford's has shrunk in recent years to $56 million. It pays only $9.9 million -- about 5.5 percent of its $181.1 million budget -- to pay off the debt.

"We decided that our debt was getting too high and we could put cash into some of the projects if we didn't have to pay out debt," Kershner says.

Baltimore County also spends a smaller portion of its budget than Howard to pay its debt. It reserves $59 million -- 7 percent -- of its $848.5 million general fund for debt payments.

Budget analyst Keith Dorsey says Baltimore County expects to get nearly all its projected revenues.

"Some counties missed on their income tax estimates and anticipated continuous growth," Dorsey says.

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