Facing Economic Reality

January 02, 1991

Who is to blame for the mounting budget deficits in state and local governments? Local officials fault the regional slowdown that has sapped income and development-related tax revenues. Analysts point to years of short-sighted overspending by local governments fueled by boom-generated tax dollars and public demand. At the state level, legislators are also reaping a healthy serving of blame for missing early warnings of trouble ahead.

Governments in virtually every jurisdiction have been hit between the eyes by circumstances within and outside their control. Under-funding of welfare and other entitlement programs by the governor and legislature has made the situation worse, adding $70 million to the state's $423 million budget gap.

More important than assigning blame, however, are efforts to deal with new economic realities. Prince George's County has set a workable, if painful, precedent by freezing purchases and laying off workers to avert a $50 million shortfall. Howard County is considering a tax increase to address a $18 million revenue gap.

Anne Arundel County, one of a dwindling number of localities not yet facing a deficit, is considering a raft of cost cutting measures including merging county transportation, hiking recreation fees and cutting library hours. Next to go, says newly elected county executive Robert R. Neall, are automatic and merit pay increases for county employees. After that come layoffs.

"The days of double digit increases in income, sales and real estate taxes are over," says Mr. Neall. "If the economy continues (to falter) you simply can't make bullish projections about protecting jobs."

Marylanders must brace themselves for tough times ahead. And politicians must distinguish between economic and political realities. There's some truth to the notion that legislators and local governments were caught off guard by the current recession. That excuse no longer applies.

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