State and Local Budgets: Now Comes the Hard Part

BARRY RASCOVAR

December 29, 1991|By BARRY RASCOVAR | BARRY RASCOVAR,Barry Rascovar is deputy editor of the editorial pages of The Sun.

This has not been a pleasant year for Maryland's elected leaders. The highlights came in the early months, when there was still money in state and county coffers. Once the full brunt of the recession started to hit, smiles evaporated and gloom descended on government office buildings.

The gloom is still there.

Month after month, the sledge-hammer blows have fallen. Each month's revenue report has been worse than the last. Yet each month, the demand for social services from those thrown out of work has risen at an alarming rate. What followed was a steady stream of budget cuts that left thousands jobless, hundreds of programs decimated and state and local governments depleted of all possible reserves.

Yet what lies ahead could be even more gruesome. In fact, the easy steps have already been taken.

Gov. William Donald Schaefer has sliced more than $1 billion from the state's general fund budget, but much of this was through back-door methods -- cash caches were raided, aid to counties was cut back, no raises were given to state workers. At the same time, the governor froze government spending at current levels, then tightened the purse strings even further by imposing further cuts on most agencies.

This still wasn't enough. Sales tax and income-tax receipts plunged as the economy slowly deflated like a leaky balloon.

At the same time, the state's "business" has been booming -- more welfare applicants (the caseload is up 10 percent), more Medicaid applicants (up 90,000 people, or 13 percent), more prisoners (up 10 percent), more criminal court cases (up 6 percent). All this means more state spending, much of it mandated by inflexible federal laws.

The result, after more than 15 months of wrenching cutbacks, is downright depressing: State government faces a new budget deficit that continues to exceed $1 billion.

More sharp budget cuts are certain. But this won't be enough. Many state programs and some state agencies will have to be closed. Those state workers who avoid the next round of layoffs probably will find their pay cut at least 2 or 3 percent.

Even that won't do the trick.

Barring a major tax initiative, it will take huge reductions in state aid to localities to close the gap. The prime target will be public schools. That is the biggest chunk of state spending for the city and counties -- nearly $2 billion.

In years past, proposals to cut sharply into school aid would have been off limits. Not only did the powerful teachers' lobby stand guard against such intrusions (much of the state aid pays for their salaries and pensions) but public sentiment strongly favored a generous school-assistance program.

No longer. Education is under fire. All these billions of dollars and yet students are faring no better on test scores. Americans' faith in the public school system is eroding.

On top of that, a growing segment of the local populace doesn't give a hoot about schools. These are the "no new taxes" advocates, including many retirees. They've already put their kids through school. All they want is to keep their tax bills low.

So far, this segment has been content to see big cuts in state programs. They haven't felt any pain to date. That will change in 1992, as the budget crisis descends directly upon the counties.

Huge cuts in school aid would force local leaders to face unpleasant choices. In some jurisdictions where education remains paramount, the options will be clear: higher property tax rates will be approved, if that's what it takes to ensure first-class schooling. But in other jurisdictions where the "no new taxes" crowd continues to hold sway, that option might not be available.

User fees could become ubiquitous and in some cases onerous. If you want a license or a permit, if you want to use a recreational facility or a park, if you want access to a senior center or a community college course, it will cost you dearly. The counties will exploit every way to raise extra revenue.

County programs will end. Layoffs will follow. But there will still have to be steep cuts in school budgets -- or politicians must turn to that other dreaded option, higher property taxes. This would produce either a firestorm of protests from the education lobby or a firestorm of outrage from the anti-tax crowd.

Given the political upheaval that property-tax protesters generated at the polls in 1990, no county executive wants to risk his or her career by jacking up property taxes. But county leaders don't want to face down the school lobby, either.

This could set the stage for a classic confrontation between interest groups, both with enormous political muscle in the counties. Will Roger Hayden in Baltimore County, for instance, cater to the school lobby that helped get him elected? Or will he kowtow to the anti-tax crowd that also backed him vociferously in the last election?

Someone is going to be bitterly disappointed and turn on political leaders with a vengeance. Someone is going to feel betrayed in 1992.

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