Waiting for the burst of Baltimore's bubble

City budget: With economic base stagnating, municipal government must prepare itself for downturn.

April 03, 1999

THESE ARE some of the best economic times in America's recent history, but you wouldn't know that living in Baltimore. The local tax base is flat. Decades of residential and commercial out-migration continue. Yet budget requests from municipal agencies keep growing. In short, Baltimore is living beyond its means.

This is the backdrop to the recent $1.6 billion budget proposal, which calls for the elimination of nearly 600 jobs from the city's work force of 16,243 -- as a way to position Baltimore for tougher national economic times.

"The city is at a crossroads from a policy and political point of view," Budget Director Edward J. Gallagher warned. "The city will have to decide what services we provide year after year."

The spectacular stock market performance of recent years has benefited Baltimore by freeing City Hall from an annual $10 million obligation to its pension funds, which have been showing a surplus. This and other artificial supports of the municipal economy will end, however, when "the troubling economic symptoms dogging much of the globe come home to our borders," Mr. Gallagher writes.

This somber assessment could not be more timely. With active campaigning for mayor and City Council about to start, candidates need to focus on ways to address the challenges of Baltimore's economic future.

During Kurt L. Schmoke's 12 years as mayor, the city has been buffeted by recession but a major fiscal crunch was avoided. Unfortunately, the absence of a crisis made it easy to avoid overdue but painful downsizing of bloated city government.

A case in point was an early retirement program involving 938 city employees in the summer of 1996. Its purpose was to trim the work force without layoffs. But the promised reduction of the bureaucracy never happened, according to City Council President Lawrence A. Bell III, who estimates that up to 75 percent of the jobs were later filled with new hires.

City Hall's failure to downsize in good times means that the next mayor may have to make serious cutbacks in bad times. The current boom will end. "The only question is when and how," says Mr. Gallagher.

During the election campaign, we expect mayoral candidates to outline their proposals for assuring Baltimore's fiscal stability under economic conditions that are likely to be less auspicious than they are now. Of particular importance are their views on privatization of services now performed by the city and whether bureaucracies -- the giant Department of Public Works, above all -- should be reorganized.

Pub Date: 4/03/99

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