Shell Game in Prince George's

April 16, 1991

Until now, Prince George's County Executive Parris Glendening has been a model of responsible and visionary leadership in tough times, slashing spending and wringing impressive concessions from county labor unions.

But his latest scheme to deal with the county's deficit-traumatized budget is more irresponsible than innovative. In a dangerous, politically inspired gamble on better times, Mr. Glendening has won preliminary approval from the county council to borrow $60 million -- probably by selling short-term notes -- to help cover this year's $80 million revenue gap. The script goes something like this: The county borrows money to get through the next year without slashing services, the economy picks up and Prince George's pays off the loan.

The rationale for this is easily understandable. Like most suburban outposts, Prince George's troubles stem from deep, unexpected gaps in tax receipts rather than long-term structural deficiencies. Short-term borrowing, says Mr. Glendening, will allow the county to pay its bills without compromising education and other services. This wager is predicated heavily on a return to near historical growth rates and some $40 million in new taxes. "You don't necessarily have to destroy service levels in one year if you can cover a shortfall in subsequent years," said Mr. Glendening. "A year from now will find us with preserved educational resources and ready to start our recovery."

The lessons of the recent past, however, suggest that this is not a time of fiscal predictability. A year hence, Prince George's may well find itself in the position of still having to cut services under the weight of heavier debt. There's also the strong likelihood of a downgraded bond rating, which will make future borrowing more expensive.

Mortgaging future cash flow to pay this year's bills is appalling fiscal policy masquerading as a solution to difficult economic times. The current recession represents an unwelcome day of financial reckoning for most jurisdictions in the region. Attempting to avoid the inevitable is a dangerous shell game.

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