Size of deficit surprises city, county officials Most leaders take wait-see attitude

August 24, 1992|By Peter Hermann | Peter Hermann,Staff Writer Staff writer Greg Tasker contributed to this article.

Gov. William Donald Schaefer's warning of yet another budget deficit and impending cutbacks did not particularly surprise local government leaders -- the likely magnitude did.

County executives and Baltimore officials said yesterday they are taking a wait-and-see attitude, hoping that worst-case scenarios of drastic cuts in state aid do not come to pass when Mr. Schaefer drafts his new plan of attack by Oct. 1.

"We anticipated to some extent fairly severe cuts from the state," said Clinton R. Coleman, spokesman for Baltimore Mayor Kurt L. Schmoke. "We are taking some steps to make adjustments for those cuts. But it sounds as if the governor is going to make even deeper cuts than anticipated."

Mr. Schaefer announced Saturday, at the Maryland Association of Counties annual meeting in Ocean City, that the state might be heading for a budget deficit of $500 million -- twice as much as previously thought.

The governor warned local leaders to anticipate sweeping cuts in a state budget that already has been trimmed by $1.1 billion in two years. He also said whole state agencies could be eliminated, predicted state employees would lose their jobs and said a special session of the General Assembly may be needed to deal with the problem.

Local leaders said it was impossible to say how they will deal with the situation until Mr. Schaefer outlines his proposed cuts in the coming months.

"Five hundred million dollars is quite a lot of money," Howard County Executive Charles I. Ecker said. "The economy is flat. What we really need is some long-range plan. We are going from day to day. If we could plan for a reduction over a period of time, it would be much easier."

"We are preparing and responding," said Anne Arundel County Executive Robert R. Neall, who noted that he went to Ocean City directly from the Republican National Convention "because I knew there would be some word on what was going to happen."

Mr. Neall said Anne Arundel "has received more than its fair share of cuts" and the 1993 budget was drawn up "with the idea that the state was not out of its financial troubles." He said he "will take appropriate action" when he finds out the governor's specific plans.

But that does not include raising the piggyback income tax rate -- a move that Mr. Schaefer said might be considered by some jurisdictions.

"That is not one of the appropriate actions," Mr. Neall said. "We have a budget only 1 month old. We can go back and make changes."

Mr. Ecker said Howard, too, has made provisions for another state cut, but now "we don't know whether it will be enough."

And he did not like the idea of raising local income taxes to make up the difference: "I think raising taxes in a recessionary year is counterproductive," he said.

Ronald Sundergill, president of the Frederick County Board of Commissioners, said he wouldn't be surprised if the governor's projected deficit turned out to be even higher.

"Last year there were so many changes in what revenue projections were, a couple of times we thought we were at the end of cuts and there turned out to be more," he said.

He said it was doubtful the commissioners would consider raising the piggyback tax in the current fiscal year. But he did not rule out such a move next year if the fiscal crisis worsens.

"I'm certainly not going to allow our education system in Frederick County to go in decline," he said.

Carroll County's board president, President Donald I. Dell, said the commissioners have vocally opposed increasing the rate of the piggyback tax, which amounts to 50 percent of the state income tax in nearly all jurisdictions. But Mr. Dell, too, said that stance may have to be re-evaluated if the budget ax falls hard on the county.

"I would not want to do it unless it was absolutely necessary," he said.

The prospect of even harder times also worried area school superintendents, with education representing the single largest expense for local governments.

"It's just hard to swallow for the second year in a row," said Cheryl A. McFalls, president of the Carroll County School Board. "I just really wish the governor and our delegates and all the members in Annapolis could have a better handle on budget projections. It's very frustrating."

Nat Harrington, a spokesman for Baltimore School Superintendent Walter G. Amprey, said more cuts might mean local businesses may have to take an increased role in education.

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