Shrinking population causes budget woes

Layoffs, cutbacks: Baltimore's fiscal troubles will go from bad to worse unless growth resumes.

March 29, 2001

THE POSSIBILITY of 547 municipal layoffs -- on top of more than 200 positions that remain unfilled -- underscores the seriousness of Baltimore's fiscal crunch.

"The next two years are going to be the toughest two years we have faced," Mayor Martin O'Malley predicted yesterday as he unveiled a preliminary budget that assumes no growth in the national economy.

That conservative assumption is important because more than 20 percent of Baltimore's general fund revenues come from state or federal sources. Moreover, stagnation could severely reduce income- and service-tax receipts, which account for nearly 16 percent of the general fund.

Property tax revenues -- 53.7 percent of the general fund -- also could take a hit in a recession. Even in the good times, downtown real estate and upscale homes along the city's northern border increased only by 3.4 percent in value. Reassessments of properties in less desirable areas may actually show a loss of value.

Plummeting population is at the heart of Baltimore's budget crunch. Since the 1950s, when population peaked at 950,000, the city has lost nearly one-third of its residents. The exodus has eroded much of the tax base. In the past 10 years alone, the city lost 17 percent of its jobs.

"When you lose population over such a long time, you lose many of your paying customers, you lose your revenue base," Mr. O'Malley said yesterday.

Trying to sound optimistic amid this dreary evidence, the mayor said nothing in the bare-bones budget proposal was cast in stone. In reality, though, many services are going to be curtailed, including libraries, recreation and parks, arts and culture and programs for senior citizens.

To his credit, Mr. O'Malley, during his 14 months as mayor, has enlisted business organizations to help him rethink the local government's functions and staffing.

In the end, though, Baltimore's future will be assured only if its taxpaying population begins expanding again and revenue growth outpaces increases in costs of governing. Above all, the city needs more taxpayers in its depopulated neighborhoods.

For years, this newspaper has urged City Hall to market Baltimore's affordable houses in Washington. Yet nothing has been done to import new tax-paying homeowners.

As Washington's property prices keep soaring, the O'Malley administration should aggressively embrace this strategy. Those new homeowners would not resolve the longstanding structural problems of Baltimore economy, but they could rejuvenate neighborhoods here that are now in dismal decline.

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