State aid cuts could reach $9 million

September 13, 1992|By James M. Coram | James M. Coram,Staff Writer

County Executive Charles I. Ecker told the County Thursday to expect a $7 million to $9 million cut in state aid.

"What they take away from us this year we will not get back next year," Mr. Ecker told the council.

Mr. Ecker and his financial advisers were briefing the council on what to expect later this month when Gov. William Donald Schaefer announces his plans for dealing with a $500 million deficit in the state budget.

"There is no golden goose over the horizon," budget director Raymond S. Wacks said.

He gave the council a chart showing how the rate of growth for residential property values has slowed from 20 percent for a three-year period beginning in 1989 to less than 7 percent for a three-year period that began in January. Property taxes account for more than 50 percent of the county's $270 million budget.

Before 1990, so many new properties were being added to the tax rolls that the county could receive millions of dollars in new income each year without having to increase the tax rate. But in 1991, the county was faced with a huge revenue loss. Despite a budget $16 million less than the previous year, the county had to raise the property tax rate 14 cents for every $100 of assessed value to balance its books.

The situation is worsened by declining commercial revenues. Commercial property is taxed on the basis of cash flow, and Howard County has an office vacancy rate of 21 percent to 25 percent.

Ideally, the county would get about 32 percent of property tax income from commercial properties, Mr. Ecker said.

"I would be happy with 25 percent" given the depressed market, he said. "The higher the percentage of residential property [producing property tax income], the higher the property tax has to be," Mr. Ecker said.

The county receives 76 percent of its property tax income from housing, 1 1/2 percent from farming and 22 1/2 percent from commercial enterprises. Taken as a whole, the increase in Howard County's assessable base is less than the state average, Mr. Ecker said.

The budget presentation seemed designed to prepare the council for a battle with the Board of Education over how the cuts should be apportioned.

Mr. Wacks presented council members a chart showing that the education portion of the budget grew 7.25 percent between fiscal 1991 and fiscal 1993 while other county departments suffered an 11 percent decrease.

During that same period, state aid for education grew from $57 million to $69 million, Mr. Wacks said, while state aid to the rest of county government declined from $5.5 million to $110,000.

"We don't know what the impact is going to be yet," School Superintendent Michael E. Hickey said. "We'll have to wait and see. At this point, I don't know whether to take a short-term or long-term strategy."

County Executive Ecker told him a week ago that the county expected to use its surplus this year to offset anticipated cuts in state aid, Mr. Hickey said. He said Mr. Ecker estimated the county surplus would be $3 million to $4 million.

Also, the legislature would have to act on cuts to the education budget, Mr. Hickey said. Legislators have told him privately not to expect a legislative budget session until after the November election, Mr. Hickey said.

Governor Schaefer is expected to announce the proposed cuts after a Sept. 21 meeting of the state Board of Revenue Estimates.

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