Staying ahead of fiscal curve

Budgets: City and county officials need to take unstable economic conditions into account.

April 18, 2001

LOCAL OFFICIALS would do well to refresh their memories as they peruse budget proposals for the next fiscal year. They should think back to 1990, when a steady stream of cash slowed to a trickle.

It's true that local governments have learned some lessons since the nation's last recession forced government agencies to lay off or furlough employees. Most have established "rainy day" funds, where millions of dollars are stored to help get through tough times.

But that doesn't mean local governments can prudently spend as freely as they have in recent years when their coffers were flush with capital gains-derived revenue (due to a buoyant stock market).

Soon, they could be hit with a one-two punch: the curtailment of income-tax revenue because of the stock market's sharp drop and a worsening economy.

Unfortunately, many area governments are not preparing themselves for possible lean times.

Baltimore County Executive C.A. Dutch Ruppersberger has improved roads, repaired schools and generally run the county in a sensible way. But he picked a bad time to propose reducing property taxes by $10.5 million in fiscal 2002. That's a decision that could have short-term benefits to the county executive, who is eyeing a run for governor, but have devastating repercussions for the county.

Anne Arundel County Executive Janet S. Owens campaigned on a promise to help schools. But her superintendent's budget request is simply too high. Ms. Owens and the council should sharpen their budget knives.

Harford and Howard counties face many dangers as two fast-growing exurbs. Harford County Executive James Harkins is requesting an unreasonable 8.7 percent operating budget increase over the current spending plan. Howard County Executive James N. Robey yesterday proposed an equally disturbing 7.3 percent increase.

In Carroll County, interim schools Superintendent Charles I. Ecker has requested a 7 percent increase to cover the costs of a growing school system, but says he'll get by with less if he must. Mr. Ecker says he remembers the budget shortfalls of the 1990s too well. He became the Howard County executive in 1990 and saw county tax revenue and aid from the state evaporate, forcing him to lay off employees and cut services.

Baltimore City Mayor Martin O'Malley appears the lone economic conservative in the area: He has decided to lay off city employees and raise taxes. It's not winning friends, but it will keep the city afloat during tough times.

Other jurisdictions can avoid repeating their awful histories by adopting more cautious budgets.

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