Anne Arundel to take budget one week at a time

Economy, security costs threaten fiscal balance

October 28, 2001|By Lynn Anderson | Lynn Anderson,SUN STAFF

Anne Arundel County officials plan to address budget issues week by week in light of a weakening economy and the costs of post-Sept. 11 security measures.

But while budget cuts may be necessary, given recent reports that show that tax revenues might not be enough to cover some public programs, some in the county's business community are hopeful.

They say that a buoyant local economy has sidestepped the economic downturn thus far, and that some businesses could benefit from the nation's homeland war on terrorism.

"Nothing good came out of 9-11," said Bill Badger, president and chief executive officer of the Anne Arundel Economic Development Corporation, which has tracked about 1,600 jobs lost countywide to layoffs. "But the rebuilding process, and the fact that the county has assets in defense and intelligence industries, will be beneficial in the short run."

A recent survey of business owners by the Annapolis and Anne Arundel County Chamber of Commerce showed that 63 percent of those interviewed believe that the current economic climate is good or excellent. An additional 20 percent of those surveyed indicated that the local economy is improving.

"That's a promising indicator given recent events and the uncertainty those events have created in our national economy," said Bob Burdon, chamber president.

But whether a strong local economy will be enough to counter some of the fiscal gloom projected by county budget experts is unclear, and county officials say they don't want to take any chances.

County Executive Janet S. Owens got a first look at tax revenues last week. The report, presented by Budget Officer John R. Hammond, was sobering at best. "We will review week to week the budget situation," Owens said. "We are proceeding with caution."

County officials went into the fiscal year with some concerns. "The first 3 1/2 months have confirmed our concern," Hammond said. "We think we were right to take a conservative view of revenues for 2001."

Already, income from the hotel tax has taken a dive of 7 percent to 11 percent, he said. Levies collected at parking lots at Baltimore-Washington International Airport also could drop due because of a decline in air travel after the terrorist attacks.

Badger noted, however, that recent airline reservations at BWI have been up 110 percent, in large because of the closure and later partial closure of Ronald Reagan Washington National Airport. Southwest Airlines has reported a record 135 flights a day, he said.

Another revenue source, income taxes, a share of which the county receives from the state, could be lower than expected because of a rash of layoffs. Still, according to the most recent figures, Arundel's unemployment rate of 3.3 percent is well below the national average of 4.9 percent.

Property taxes, which account for more than 40 percent of the cash flow into county coffers, are expected to remain about the same, Hammond said.

A factor yet to be figured into the budget is overtime costs accrued as a result of upgraded security measures.

"We're not there yet," Hammond said, referring to overtime reports. He predicted, however, that recent expenses could total $100,000, a sum that could easily be absorbed by reserves. "But if this continues," he said, "it will be another story."

County officials aren't counting on much of a financial bailout from Gov. Parris N. Glendening, who is slated to meet with a coalition of county executives from around the state on Thursday. At that time, county leaders will present budget figures they hope will persuade Glendening to release funds to pay for security measures that have strained some budgets.

"Anything will help," Hammond said.

During budget discussions in the spring, Owens decided not to increase property taxes - action that would have produced an extra $6.8 million. "Had we done it, it might have made things easier now," Hammond said. "But it's academic. We didn't do it, and now we have to deal with the fact that we didn't."

Factored into the current budget is an additional $22 million for employee pay raises. The Owens administration negotiated those salary increases as part of contracts with police, fire and teacher unions, as well as white and blue collar county employee groups.

Another new expense - at a cost of $2.1 million - is a pension plan that could allow some county employees to count unused sick days and military leave toward early retirement.

Even before the events of last month, Owens took action to rein in countywide spending, implementing a hiring freeze and asking department heads to scrutinize expenses.

In the meantime, she and her staff will look to further reduce costs. Instead of using cash to pay for capital projects, some of the money could be used to float the general fund. Across-the-board cuts are another possibility.

A last-ditch measure, Hammond said, would be to raid the county's rainy day or reserve fund. But no one wants to do that - yet. "We will do all we can to make sure we don't have to tap into the rainy day fund," he said. "It's not raining yet."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.