Wholesale loss of federal jobs appears less likely now

The Economy

September 30, 1996|By JAY HANCOCK

A FUNNY THING happened to the neutron bomb that was aimed at the federal work force. It fizzled.

Now that the budget deficit, Bob Dole's presidential hopes and Newt Gingrich's popularity are all shrinking at the same pace, it's no longer open season on bureaucrats.

Or at least the bag limit has been reduced.

That's good news for Maryland, which is a workplace for 130,000 federal workers and home to more than 100,000 more who work in Washington or Virginia.

A year ago, state politicians were fearing the loss of 20,000 Maryland-based federal jobs in as little as four years. One study funded by a government-employee union said deficit-cutting could cause the demise of 100,000 public- and private-sector Maryland jobs.

Nobody is expecting federal employment to grow now, although some aren't ruling it out in a second Clinton term.

But nobody is predicting huge cuts, either.

"The anarcho-libertarian wing of the Republican Party has been properly chastised, and the no-regulation-is-enough wing of the Democratic Party has been sufficiently chastised, that we will see government survive over the next four years," said Charles McMillion, chief economist for MBG Information Services in Washington and Maryland economy-watcher.

"I think the business climate in Maryland will improve," he added.

"And it couldn't come too soon."

From McMillion, who has been more disturbed than some of his colleagues by Maryland's economic problems this decade, those are words to take note of.

And the sentiments are shared.

"We think there'll be continued pressure to downsize federal government," said Ann O'Brien Franklin, chief economist for Maryland's Bureau of Revenue Estimates. "But this wholesale loss of jobs, we think this is much less likely."

No one knows, of course, what the next term will bring, even if one were sure of the election outcome.

But the more-florid fantasies of abolishing entire federal departments seem likely to remain unfulfilled.

"The fact is, the Commerce Department is still here," said Charles Porcari, spokesman for Maryland's economic development department. NASA's Goddard Space Flight Center, he added, "hasn't been as hammered nearly as badly as we thought."

Mike Conte, director of the Regional Economic Studies Institute at Towson State University, picks up the theme. The Food and Drug Administration "has not been challenged as much as people thought," he said. "The Department of Energy has not been challenged as people thought."

A Democratic administration will continue to revamp government and adjust agencies, Conte said.

"What we're not seeing, thank God, is a blunt-edged tool used to do this."

And, even as jobs disappear in some installations, they show up in others. Pentagon reorganization will give Patuxent River Naval Air Station in Southern Maryland 6,800 direct new jobs by 1998 and is supposed to spur the creation of 4,000 more in the local economy.

The receding threat of big federal cuts seems to have calmed Marylanders' fears. They're spending more.

State sales-tax revenue has recovered from the body blow of last winter's budget crisis and government shutdown. In March through June, the last four months of Maryland's fiscal year, sales-tax revenue jumped 6 percent. Sales-tax receipts rose 4.3 percent in July, the most recent month available.

Other revenue is flowing high, too.

State taxes withheld from wages and salaries has been increasing by about 5 percent a month since March.

Looming federal cuts and lagging revenue were the main factors persuading Gov. Parris N. Glendening to oppose a state income tax cut this year. The sea change in Washington, some people think, may make it harder for him to poor-mouth a tax cut next year.

"The decision is going to have to be based on things like equity, competitiveness, fairness, tax efficiency, rather than, 'We don't have the bucks,' " Conte said.

Pub Date: 9/30/96

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