O'Malley must first address looming city budget deficit

November 21, 1999|By Barry Rascovar

SOMETIME after the cheering has ceased, and the new mayor has been sworn into office on Dec. 7, Martin O'Malley will sit down with his budget director, Edward Gallagher, and face a stark reality.

"Chief," Mr. Gallagher is likely to tell his new boss, "we're in a heap of trouble."

Baltimore's cupboard is nearly bare. There's an anticipated shortfall of $153 million over the next four years. Any growth in tax revenue will be swallowed up just meeting the state mandate for local school support.

Meanwhile, Mr. O'Malley wants more money for police, the courts, to treat drug addicts and to give city employees a modest pay raise. He can't do any of those things until he figures a way out of his budget bind.

Losing taxpayers

Something has to give. Baltimore's revenue stream isn't big enough to support all its current services and its 16,000-person work force. The tax base is eroding as 1,000 residents leave town for the suburbs every month.

A wide range of creative options must be explored. This will provoke controversy. But Mr. O'Malley has little choice: To tolerate the status quo would be suicide for his city.

First, he must reduce the size of city government. Wise investments in technology have helped private-sector companies cut payroll while increasing efficiency. City government can do the same thing.

Marginal city services should be eliminated. Some activities would be better off privatized. Overlapping agency functions should be merged and top-heavy management layers eliminated. Cutting the city work force by 1,000 would save $30 million a year.

Health-care benefits for city workers and city retirees are generous compared with other health plans. A city worker's co-pay for prescription drugs is just $5, while many private health-care plans require members to pay up to $15.

Savings from a higher co-pay could be substantial. The city pays $56 million a year for prescription drugs for municipal workers, double the cost of just five years ago.

Explore privatization

Allowing private companies to handle some city functions holds considerable promise. Many successful companies have contracted out services, such as maintenance or data-processing, not only to save money but also to narrow their focus. That's what Baltimore ought to do.

This approach has worked well in other troubled cities. Persuading labor unions to allow competitive bidding for the right to deliver services could be difficult, but worthwhile.

Privatizing the city's water system apparently is being explored. But this could pose troubling questions about reliability of service and the tendency of a private owner to seek ever-higher profits through higher rates.

We've seen in the electric power industry what happens when a private company such as Baltimore Gas and Electric Co. cuts back on its repair crews to save money. Privatizing Baltimore's water supply holds similar perils.

Even if such a deal is eventually struck, Baltimore's long-term financial imbalance would remain. At most, the city might gain a huge, one-time windfall, providing money for new buildings, for school computers and for modern police equipment.

But to get Baltimore out of its annual fiscal hole, the new mayor must lower operating costs substantially.

All ideas are worth discussing. Given Baltimore's dire straits, every avenue should be explored.

The mayor-elect can start by reading a 1991 Greater Baltimore Committee report, "The Strength of Maryland Depends on the State of Baltimore."

It's a sensible compilation of creative ways to get Baltimore headed in the right direction. It urges the mayor to make "dramatic changes in the delivery of essential services by the city.

"Just as Baltimore's businesses have had to radically redefine how they operate to remain competitive . . . so too must city government," the GBC concludes.

Baltimore "must be open to new ways to do old jobs and even reconsider what services it should be . . . providing. . . . More novel approaches may be required, including contracting out and creating multi-government authorities to deliver the services."

There's a reason the same ideas keep popping up. They have worked in the private sector. They have worked for other cities down on their luck. Why can't they be made to work in Martin O'Malley's Baltimore?

Barry Rascovar is a deputy editorial page editor.

Pub Date: 11/21/99

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