Panel mulls fiscal squeeze

Advisory group ponders revenue and debt load

Report expected next month

Recommendations to help in budget decisions

January 10, 2003|By Larry Carson | Larry Carson,SUN STAFF

Prime commercial land in Howard County sells for $700,000 an acre while new office buildings stand partly - or completely - empty. Newly assessed county homes are worth roughly one-third more this year, state officials say, but taxes on those homes won't provide the $86.3 million requested for new school construction.

It is a tough year for predicting how much money county government should spend or borrow, what with rumors of huge state budget cuts and the prospect of war in Iraq. But a 20-member Spending Affordability Committee appointed to advise the county executive is going to try.

Raymond S. Wacks, the county budget director, started the committee's annual deliberations yesterday, and a final report from the group is expected by late next month before County Executive James N. Robey makes his final budget decisions.

Columbia bank executive Michael Galeone summarized the group's challenge.

"It's almost impossible to predict" what will happen this year, he said.

Prosperous Howard is in a difficult squeeze, Wacks told the group, because it is a magnet for families seeking better schools - which drives up home and land costs. That increases demand for services, such as more schools, more teachers, police and even snow plow drivers.

Robey has proposed a separate plan to raise the real estate transfer tax to leverage $215 million for school construction over eight years, but that may not fly with the Howard state legislators who must approve it.

Meanwhile, the committee has to look at revenues, debt load and prognostications to make a recommendation of its own.

Wacks noted, for example, that Howard has too much debt now. "We have one of the highest per-capita debt burdens in the region," he said.

But because of the county's relative wealth and ability to pay its debts, it also enjoys a top AAA bond rating by New York rating houses, which are confident the county can handle its debt.

The proposed transfer tax increase would not affect that, Wacks said, because the borrowing in that plan would be paid for by the dedicated tax increase it involves. "Generally, Wall Street is not upset about our debt burden because of our wealth and our taxing capacity," he said.

Featured speakers yesterday were the county's state assessors, supervisor Howard Levenson and appraiser Charles "Chip" Watson.

Levenson said the roughly 30,000 residential properties in Ellicott City, Elkridge and east Columbia inspected last year rose an average 34 percent in value, while commercial properties lagged at 16 percent. But the county's 5 percent cap on assessments limits the county's revenue boost, though Wacks noted it does provide a predictable annual increase. Property taxes provide half of county revenues.

Watson said fewer new office buildings are empty this year compared with last year, and land values are skyrocketing, especially for commercial retail property. Land for Columbia Crossing II, where the Home Expo store is located, sold for $700,000 an acre, he said.

Even older apartment complexes are selling for astronomical prices, Watson said, noting a recent sale at $100,000 a unit. Just five years ago, apartments were selling for less than half that average price per unit.

Driving all the high prices is the scarcity of land to develop, Levenson said, forcing builders to use every scrap.

Heads nodded at bank executive Galeone's final comment that "being conservative is probably very, very important."

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