Harsh Reality Comes to the Counties

BARRY RASCOVER

September 15, 1991|By BARRY RASCOVAR

For Maryland's county executives and councils, the time between now and next summer could be known as "the nine months from Hell."

Annapolis' growing deficit is trickling down to the local level, forcing major cuts in services or (horror of horrors) higher taxes. For the first time in this recession, county officials are bound to lose popularity no matter what they do.

In the past year, while Gov. William Donald Schaefer cut heavily into state spending and lawmakers grudgingly raised nuisance taxes to counter continuing plunges in revenue, Maryland's county officials had it easy. All they had to do was a little belt-tightening and they were able to balance their budgets without raising property taxes.

In fact, many executives and councils actually lowered taxes for homeowners. They heard the tax rebellion clamor and responded. But they sidestepped the downsizing the governor had to confront.

Why? Because of a state safety net thrown up over the years to protect local governments. Even when property tax revenues fail to grow rapidly, the counties know that big bucks will be coming their way from Annapolis -- $2.7 billion in the current fiscal year.

So while Mr. Schaefer was eliminating 3,300 positions from state agencies and reducing general government expenses below the spending level of two years ago, county officials could bask in a 13 percent jump in aid to local governments.

That largess is about to end. Maryland's huge deficit crunch is forcing the governor to get tough with local governments. And with good reason. If state agencies must undergo excruciating reductions, the localities should share the pain.

How desperate is the situation? General Assembly forecasts show a current-year deficit of $365 million that could reach $466 million; a deficit next year of $605 million that could increase to $749 million; a deficit in 1995 of $1.2 billion; and a deficit in 1999 of $2 billion.

Under one scenario being discussed, when Mr. Schaefer acts to balance the present-year budget, he'll do so by imposing a 4 percent across-the-board reduction on state agencies totaling $115 million. He'll also cut certain local-aid programs 25 percent and certain grant programs that affect the counties.

For instance, the cuts will include $14 million in non-mandated school aid and $11 million used to reimburse the counties for property tax credits. The state, under this proposal, will take back another $77 million in local aid going to community colleges and police and fire departments.

The loss of funds, not counting cuts in grant programs, will total $14 million in Baltimore County, nearly $17 million in Montgomery County, $11 million in Prince George's County, $7 million in Anne Arundel County and $4 million in Baltimore City.

This will be just a prelude for the extensive cuts that Mr. Schaefer could propose in January. To close what already is a 1992 shortfall topping three-quarters of a billion dollars, the governor is contemplating whopping 12 percent across-the-board cuts in state agencies (total: $372 million) and keeping local aid at this year's reduced levels (total savings: $247 million).

Virtually all of the local-aid cuts would come out of money for schools, libraries, community colleges and private colleges. County officials would either ante up money to compensate or force a huge retrenchment on education facilities.

Another option calls for a different mix of cuts to local programs but the total would remain the same, $247 million. A third alternative would target state-run programs for extra cuts, but these are so severe legislators are likely to recoil in horror (such as ending the state's welfare and health programs for the working poor and disabled).

The screams of anguish will be unprecedented. Teachers unions and entrenched education administrators will be up in arms. Higher-education academics will be furious. County officials will be pummeled by angry interest groups.

Meanwhile, the across-the-board cuts to state agencies will create more discontent. The cuts include $78 million in the University of Maryland System, $76 million in prisons and police, $97 million in health programs, $27 million in social services and $11 million in juvenile services.

Yet if these proposals are adopted, the state will end up with a balanced budget next July without raising taxes. It's the Draconian way to do it, but it can be done. Such a strategy would leave it squarely up to the General Assembly whether it wants to swallow these unpalatable cuts or swallow that other political poison -- tax increases.

On the county level, though, the countervailing forces will be most vocal and will be felt equally by county executives, commissioners and council members. The powerful teachers and education lobbies won't stand for these huge cuts. They helped elect many county officials last year; they will expect favored treatment. So will other injured interest groups. Yet to accommodate their wishes would require a hefty property-tax hike, a step sure to send the incensed tax-rebellion hordes back into the streets.

Life could prove exceedingly stressful in the counties over the next year or two. The tough decisions local officials have intentionally avoided are about to hit them squarely in the face.

Barry Rascovar is deputy editor of the editorial pages of The Sun.

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