Devolution Hot Potato

April 30, 1995|By BARRY RASCOVAR

The counties had better get used to it: ''Devolution'' is headed their way.

From Washington to Annapolis to localities. That's how the downsizing of American government works. Washington takes welfare and Medicaid and hands them off to the states. The states, in turn, send along a big chunk of the programs to the cities and counties.

It's already started. Welfare reform likely to pass Congress will return control of this program to the states. But the amount of federal money will no longer be unlimited. It will be capped. As inflation sets in or as the welfare rolls grow, states will be in a precarious squeeze. That's when states will start handing off more of the welfare responsibility to the local governments -- but not the money to pay for it.

Maryland's governor and some legislators have already hinted that counties are in for rougher times. Just as Washington is trying to trim the fat and reduce the bureaucracy, so is Annapolis. Gov. Parris Glendening is likely to embark on major restructuring and downsizing. That means cuts in local support, too.

In fact, some legislative leaders say that the only way state government's chronic budget problem can be fixed is to restrict the flow of funds to the city and counties.

The fastest-growing component of the state budget is aid to local governments. It will rise by more than 7 percent in the Glendening budget. State agencies are getting a mere 2.3 percent increase.

Most of that state aid goes directly to schools, the biggest expense of local governments. It's hardly frivolous spending. After subtracting the extra money to pay for new students, local education is left with a 4 percent increase -- enough to cover inflationary costs. Local officials fear that Maryland is ''flat-lining'' education.

That's what may happen next year. House Speaker Casper Taylor pushed a plan this session that called for tax cuts paid for by slowing future growth in education aid. For Baltimore County, the reduction would have meant a loss of $11 million from the amount the county ended up receiving.

That's the way devolution works. A more accurate term for this phenomenon would be cost-shifting. From Washington to Annapolis to the localities.

Now Governor Glendening and Mr. Taylor have committed to a big tax reduction next session, if at all possible. Cutbacks in federal aid might make that pledge irrelevant, but chances are 1996 will bring lower state tax rates.

The question is how to finance the tax cut. State agencies can be pruned, and some eliminated. The biggest saving, though, would come from slowing the rise in local aid.

That puts county and city officeholders in a bind. Do they turn around and trim education?

Not likely in fast-growing suburban counties being inundated by new students. Without this extra state school aid, educators will have to increase class sizes dramatically, consider putting some schools on split shifts and eliminate such things as gifted-and-talented programs, extracurricular activities and pay raises for teachers.

It's either that or (heaven forbid!) raise local taxes. That's right. The dreaded ''T'' word.

Sure, Washington can shift costs onto the backs of the states. And the states can replicate that feat by shifting the burden to the localities. But after that, there's nowhere else to transfer the financial burden.

Citizens in each county and city will have to decide for themselves which they prefer.

How important is it, for instance, in Baltimore County to hold the line on its piggyback income-tax rate? Important enough to force an increase in classroom sizes?

How important is maintaining the existing property-tax rate in Howard County? Important enough to do away with G&T programs? What about conservative Carroll County? Do officials and citizens there want to preserve their low tax rate even if it means inferior schools?

Would Harford County officials opt for higher taxes to support stronger schools? Would Anne Arundel citizens favor ''no frills'' schooling to preserve their tax cap?

Local officeholders and citizens had better start thinking about these options. Devolution sounds wonderful in theory. But by the time this concept reaches city hall or the county seat, reality sets in.

Sure, a tax cut may eventually wend its way from Annapolis to you, but it might just mean higher local taxes -- or poorer schools.

Barry Rascovar is editorial-page director of The Sun.

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