Bracing for Doomsday -- Again

July 18, 1992

Local officials take slim solace in the fact they predicted flat economic growth in the coming year -- and state budgetmakers did not. Being right is proving painful.

The Schaefer administration announced $40 million of cuts in local aid last Wednesday just to close out the books for the fiscal year, which ended June 30, without a deficit. But revenue is trickling in more slowly than projected, and state bean counters already are estimating a new deficit for the current fiscal year of $170 million.

For all the contention and confusion between the state and counties in this spring's legislative session, emotions may be more strained this time. Politicians are likely to be less willing to hike taxes nearer an election year and unions less willing to lose cost-of-living adjustments for their members.

Baltimore City and the major counties all built reserves to cushion expected budget blows. Still, some jurisdictions are in better shape than others:

* Baltimore, with a meager reserve of $1.6 million, has already been cut more than triple that. But Mayor Kurt L. Schmoke feels the city, with its high property tax rate, can't afford to raise taxes further. Cuts in services appear certain.

* Anne Arundel County will lose $2.7 million. Executive Robert R. Neall says that will have minimal impact. Like most of his colleagues, Mr. Neall is adamant that the county will weather this first round of cuts by squeezing each department before he taps into a $10 million "rainy day fund" -- the hard-won centerpiece of his fiscal 1993 budget.

* Baltimore County budget director Fred Homan warned last spring the state was riotously optimistic in its revenue projections. His county, with $10 million in reserve and stringent reviews for purchasing, is in better shape this year to absorb the state givebacks. "My gripe isn't that they're going to nail us. . . [But] be upfront about it," Mr. Homan says. He believes the General Assembly should call a special session by September to confront the full shortfall. The longer legislators wait, the fewer options localities will have.

* Carroll County loses $622,000, which will impact police and satellite education programs. The county commissioners will cut from departments before digging into their $3 million reserve.

* Harford was the only major jurisdiction not to order furloughs last year. It has roughly $7 million in savings. But even here, "quality of life" is threatened: The library is considering a cut in hours.

* Howard County budgetmakers forecast a worst-case scenario on state aid. Officials know an initial $1 million cut is only the tip of this iceberg, but add that it's unlikely Howard's piggyback income tax would be increased.

State legislators feel they provided the localities a safety net by giving them the power to raise their piggyback tax rates 20 percent. Until local officials take full advantage of this new taxing power -- only five counties did so this year -- the state may be unwilling to heed their pleas.

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