Md. fiscal crisis may squeeze county budgets

Higher taxes weighed if state aid decreases

`Who's going to blink first?'

Robey forced to consider increasing the rates

Howard County

April 04, 2003|By Larry Carson | Larry Carson,SUN STAFF

With slot machine gambling revenues seemingly kaput and Maryland's governor vowing no higher income or sales taxes, local government leaders across the state fear they may be forced to pay with sharply higher local taxes for the state's budget turmoil.

Howard County Executive James N. Robey is widely expected to seek substantial tax increases, partly because of lost state aid, when his budget comes out in two weeks.

And layoffs of Harford County workers are threatened if $5 million more in state aid is lost.

"I go to bed thinking about it," Robey said of the state budget crunch.

"Who's going to blink first? Somebody has to," he said about the standoff in Annapolis.

The state budget is far from settled, with four days remaining in the 90-day General Assembly session.

But worry is increasing after comments Wednesday by Gov. Robert L. Ehrlich Jr.'s press secretary, Paul E. Schurick, that "local government aid is going to be decimated," and "the Thornton Commission is all but a thing of the past."

Some officials hope that is the rhetoric of political frustration, but others take it seriously.

"We relied on this one source [slots revenues] to be the cure-all, particularly for educating our children," said Baltimore City Council President Sheila Dixon.

"People aren't going to understand" if that promised money doesn't materialize, she said.

A worried Janet S. Owens, the Anne Arundel County executive, said, "Regrettably, my worst fears have been showing up," as the legislative session approaches its conclusion.

Montgomery County Executive Douglas M. Duncan is less worried, calling Schurick's comments "huffing and puffing."

Duncan predicted that "when they [Ehrlich administration officials] think about it, they'll realize they can't do that. Does he want to be known as the man who destroyed K-12 education?"

Duncan recently proposed a $3 billion budget that would increase the county property tax rate by 3 cents and local income taxes to the legal limit -- an average annual tax increase of $340 per household.

Harford County Executive James M. Harkins is proposing a $410 million budget, $4 million lower than last year's. If the county loses $5 million more in state aid, it could mean layoffs, Harkins said this week.

"If we are stuck with cuts that large, we will have a major problem," he told the County Council yesterday.

Already dealing with state transportation funding cuts, county officials "are apoplectic about the specter of further devastating reductions," especially for public safety and education, said David S. Bliden, executive director of the Maryland Association of Counties.

Pragmatists

Local elected officials are pragmatists, Bliden said, and 19 of Maryland's 24 jurisdictions raised taxes during the past four years while the state cut income taxes, leaving a huge projected deficit.

"They're passing the buck to us, and we have no one to pass it to but the taxpayers," said Kevin Kamenetz, chairman of the Baltimore County Council. "We didn't create their budget mess."

But others are not upset -- yet.

Despite the bitter words, Baltimore County Executive James T. Smith Jr. believes slots may come back next year -- pre-empting further fiscal crisis, said Elise Armacost, his spokeswoman.

Meanwhile, with a status quo budget and $120 million in surplus and rainy day funds, Smith believes Baltimore County is in good shape -- for now -- Armacost said.

"There are still a lot of pieces that have to be played," said Del. Frank S. Turner, a Howard County Democrat who serves on the appropriations committee.

The death of slot machine gambling this year would leave a relatively small, $15 million hole in the state's fiscal 2004 budget -- but only if Ehrlich accepts tax increases proposed by both houses of the legislature.

If he does not, as much as $225 million in further reductions could be needed.

No veto override

"We can't override his veto. Even if we did, he has the prerogative of cutting the budget by 25 percent. Potentially, it could be very dire," said state Sen. Edward J. Kasemeyer, a Democrat who represents parts of Baltimore and Howard counties, and serves on the Senate's budget and tax committee.

Still, the legislators could raise $165 million by reducing the amount of money that pays interest on state debts, thereby forcing an increase in state property taxes to fill the gap, said state Sen. Robert H. Kittleman, a Howard County Republican and an Ehrlich ally.

"Everybody is extremely protective of locals down here. But you finally get so squeezed that you can't do it any more," Kittleman said.

Sun staff writers Lane Harvey Brown, Andrew A. Green and Ryan Davis contributed to this article.

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