Fiscal '95 worries executive Budget hearing set for Dec. 7

November 17, 1993|By James M. Coram | James M. Coram,Staff Writer

Next year's budget could be his most difficult yet, Howard County Executive Charles I. Ecker says.

And that's saying a lot. Money was so tight in 1991 -- Mr. Ecker's first year -- that after raising taxes, laying off 40 employees and leaving another 119 positions unfilled, the county still suffered a $3 million deficit.

To make ends meet the following fiscal year, the county furloughed employees for a week without pay and shifted money from pay-as-you-go projects to bond funding.

Halfway through this fiscal year, county finances are more stable. But routine expenses such as road resurfacing and vehicle replacement continue to be neglected.

Deferring needed projects "may come back to haunt us," Mr. Ecker said. "I'm afraid the public feels the problem is gone. There may be a perception out there that things are great."

Mr. Ecker should get a better feel for budget perceptions Dec. 7 when he holds a preliminary hearing on the fiscal 1995 budget. The fiscal year begins July 1, but the hearing is held each December to give people an opportunity to tell the executive what they want in the budget before he begins working on it.

Preparation of the proposed capital and operating budgets begins in earnest after the hearing. The proposals are presented to the County Council in April, which holds its own public hearings before voting on the budget in late May.

A major problem facing the county is long-term debt, Mr. Ecker said. "I'm concerned about mortgaging our kids' future. We have to look seriously at options."

Since 1989, the county's long-term debt has grown by 132 percent -- from $135 million to $312 million. The county's per capita debt, offset by the county's growth rate, increased at a lesser pace but is still staggering. It rose from $760 per person in fiscal 1989 to $1,490 in fiscal 1993, increasing 45 percent in the last year alone.

The $463 increase in the last year came about partly because the county sold an extra $60 million in bonds to take advantage of historically low interest rates, said Raymond S. Wacks, the county budget administrator. The purchase will save money over the next two years, he said.

Even if the $60 million is subtracted, county debt "is still a problem," Mr. Wacks said. "Clearly, we have to be concerned."

County debt service alone is growing by $3 million to $4 million a year.

The concern is expected to be reflected in a report being prepared by the county's spending and bond affordability committee.

"It is prudent to keep challenging the variables" affecting the amount of new debt the county can comfortably absorb each year, said Jack Hollerbach, chairman of the committee.

The committee has been examining those variables in detail for the first time, looking at population demographics to project anticipated revenue from local income taxes and analyzing changes in property assessments to estimate property tax revenue. Together, property and local income taxes provide 85 percent of the county's revenue.

The committee will submit its report to the executive next month.

"If we don't do something about our debt, we're going to have to increase taxes to pay for it," Mr. Ecker said. "It's going to be very difficult to pay for schools, waste management and roads" without increasing taxes or critically increasing the county's debt.

Mr. Ecker said he's so worried about road resurfacing that he is recommending a seemingly paradoxical strategy. He wants the county to issue $3 million in short-term bonds.

"Road resurfacing has been deferred in the operating budget ever since I've been here," he said. "It cannot continue. The cost of the interest would be less [over the five-year life of the bonds] than the cost to rebuild the roads if we don't resurface."

The county needs to look at alternatives to new school construction, such as year-round schools, increased class sizes and double sessions, Mr. Ecker said. "In 10 to 12 years, we'll be closing some schools."

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