Boom times bypass suburbs

While state enjoys its surplus, many counties struggle

February 28, 2000|By Jay Apperson | Jay Apperson,SUN STAFF

In Annapolis, state lawmakers are wallowing in a cool $1 billion in found money. Baltimore County officials are measuring their budget surplus at $148 million and growing. With Howard and Anne Arundel counties also comfortably in the black, these seem to be the days of plenty for Maryland governments.

But that's not so. At least not in the ever-expanding outer rings of suburbia.

In Harford, Carroll, Queen Anne's, Frederick and Charles counties -- where cornfields have given way to housing developments -- financial forecasts border on the bleak. Officials are talking about deficits, doomsday budgets and, to their dismay, tax increases.

They know that this is the last thing that their constituents expect to be hearing. Not with all this talk of a robust economy and the huge state budget surplus.

"There is a certain frustration level that comes with this, that people think we're fat and happy," says Harford County Executive James M. Harkins, who is preparing a proposal to raise taxes. Steven D. Powell, budget director in Carroll County, says that his staff members have asked: "Why aren't we sharing in the good times?"

The answer, officials say, can be found in the bedroom communities that have sprung up during the past several years. These neighborhoods are filled with families that need police and fire protection, with children who will attend public schools.

The result: soaring costs in the two area where county governments spend the most. The problem has been compounded, officials say, because the influx of new residents in these counties has not been matched by industrial and commercial expansion, the kind of growth that generates substantial tax revenues.

`Dire situation'

In Harford County, officials say they could proceed with a stripped-down budget with no new taxes for the next fiscal year, but they would then face a deficit of nearly $7 million by next year.

"It's a dire situation that I inherited," says Harkins, a first-term county executive. So dire, says Harkins, a Republican, that he is almost certain to ask the County Council to raise Harford's rate on the piggyback tax on income, a change that could cost a typical taxpayer nearly $200 a year.

Harford is not alone. Officials in three other counties facing similar problems are considering tax increases.

Although Carroll officials have directed that a budget be drafted with no tax increases, the spending plan will have to be tightened at least "a notch or two," says Powell, the county budget director.

Harford officials have seen this budget crunch looming for at least three years, Harkins says. The point hit home last year, he adds, when a Charles County commissioner told him about a similar crisis in Southern Maryland and talked about raising taxes. "I said, `Get out of here,' " Harkins recalls.

Faced with an influx of new residents and a budget with a dwindling surplus, Charles officials raised the rate of the county's piggyback tax last year from 50 percent to 56 percent and increased the county's property tax rate by 5 cents, says Budget Director David Eicholtz.

In Queen Anne's, home to an increasing number of workers from the Western Shore, officials years ago saw a need for more tax revenue. In 1995, the county raised the property tax rate by 18 cents, but then reduced it by 16 cents within three years. County Administrator Mark J. Belton says the move was shortsighted, adding, "My fiscal year 2001 budget is quickly going to hell in a handbasket."

Now Queen Anne's officials are seeking General Assembly approval to raise the tax rate on property transfers by one-half of 1 percent and are considering an increase in the piggyback tax rate.

Frederick County residents also might be looking at a tax increase. Although the county enjoyed a $15 million surplus less than a year ago, financial projections show that it faces a $75 million shortfall within six years, says Diane Penn, the county budget officer.

She says officials asked the county's General Assembly delegation to seek authority to levy a transfer tax and a hotel tax, but were turned down. Now, she says, officials are considering an increase of as much as 36 cents in the property tax rate, with an increase in the piggyback tax rate.

"How can you get the general public to understand that the county is not in the same position the state is in? That's got to be sold," she says.

Pitching a tax increase

Harford's Harkins agrees. But he has a pitch in mind, one that is similar to the argument employed in Charles and Queen Anne's counties. Officials there said the money is needed for quality schools, a big reason people moved to the outer suburbs in the first place.

"I'm going to tell people, `If we do raise taxes, here is where your money is going to go: schools and public safety,' " Harkins says.

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