Deficit refuted again by governor Glendening denies causing P.G. shortfall, despite state findings

June 28, 1998|By C. Fraser Smith | C. Fraser Smith,SUN STAFF

As he launches his bid for re-election, Gov. Parris N. Glendening is again asserting that he left Prince George's County in good financial shape -- not headed toward a budget shortfall of more than $100 million.

Glendening, who left the county executive's post to run for governor in 1994, indicated on a radio show last week that the county was not facing a financial crisis after his tenure. His claim was first challenged when he made it during his 1994 campaign.

In an interview Friday, Glendening said: "What I did is make tough decisions and kept Prince George's in the black. We made huge cuts in the early 1990s, but we left with $48 million in reserve."

But independent analysts -- and some of the governor's supporters -- dispute that contention.

William S. Ratchford II -- former director of the state Department of Legislative Services, which analyzed the county's budget problems -- said Friday that about two-thirds of the "reserve" was earmarked by Glendening for new spending, leaving a relatively small "rainy day" fund that could be spent only on emergencies.

In a March 1995 report, Ratchford's department concluded that Prince George's was facing a $106.9 million budget shortfall at the end of fiscal 1996, 15 months away.

Glendening's reduction of the local income tax and large pay increases to county employee unions -- plus lower-than-expected tax revenues -- created the budget hole, said John W. Rohrer, legislative services' principal analyst.

The trend was ominous, Rohrer said. "It was all going in the same direction with nothing to offset it," he said.

To deal with the financial crisis, Glendening's successor as county executive, Wayne K. Curry, repeatedly traveled to New York to persuade bond-rating houses -- Standard and Poor's Corp., Moody's Investors Service and Fitch IBCA -- not to lower the county's credit rating, a critical matter because it governs how much interest the county pays on loans.

Glendening's decision to challenge the accuracy of the financial problems could make his stewardship as county executive an issue in his re-election campaign as he is trying to draw voters' attention to his administration's achievements in Annapolis.

Glendening's campaign spokesman, Peter S. Hamm, called the idea last week that Glendening left a deficit in Prince George's a "myth" perpetrated by Curry.

'Flat not true'

During a radio call-in show Monday, a caller listed a number of concerns about Glendening, including whether he left Prince George's with a deficit.

"With regard to the so-called deficit, that's flat not true," the governor said. "There is an audited report by state legislative services that shows we left them with a $45 million reserve exactly the way we said we did."

During the radio show, the governor did not indicate what he meant by "reserve." Friday, he said: "You can call it surplus, reserve, whatever you want."

According to Ratchford and Rohrer, most of the county's severe, long-term budget problems were created by Glendening's income-tax cut and pay concessions to politically powerful unions.

These contractual obligations to as many as 4,000 union workers were essentially checks written by Glendening that began to be cashed, for the most part, in the fiscal 1996, after he left county office -- checks that county officials did not foresee having sufficient revenue to cover.

"There was already an imbalance [between spending and revenue] in 1995," Rohrer said.

Curry dealt with the projected shortfall of $106.9 million for fiscal 1996 by what he calls deeply painful actions: laying off more than 116 workers, buying out other employees with severance offers and eliminating more than 500 county jobs.

"Ask the people I fired if the deficit was mythical," he said.

To increase revenue, Curry also persuaded the General Assembly to allow the county to restore its income-tax rate to 60 percent of the state income tax. Glendening had begun dropping the rate from 60 percent to 55 percent.

Curry -- who endorsed one of the governor's Democratic rivals in this year's primary, Harford County Executive Eileen M. Rehrmann, on Thursday -- called Glendening's assertion that the county was in good financial shape a flagrant rewrite of history.

"The claim that we didn't have a deficit based on the spending plan he put in place is absolutely unbelievable," Curry said. "The governor is in an almost desperate state of denial."

Some Glendening supporters agree.

"There is no question the governor left Prince George's with a deficit," said Stanley Fetter, former president of the Prince George's County Civic Federation and a supporter of Glendening's re-election bid.

Prince George's County Council member Audrey Scott, a Republican, added: "He raped this county. We are still getting over the most horrendous financial crisis this county ever faced."

'Playing with words'

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