Budget outlook swings to fair

State funds, tax revenue should prevent big cuts in county next fiscal year

`Nothing's really been solved'

Owens scheduled to offer her fiscal plan tomorrow

May 02, 2004|By Childs Walker | Childs Walker,SUN STAFF

Anne Arundel leaders have spent much of the year dreading this month, when they would have to hammer out the county's budget for next fiscal year.

But with the budget season set to start tomorrow, County Council members have shifted their outlook from gloomy to fair. A combination of better-than-expected state funding and tax revenues from the booming real estate market should save Anne Arundel from severe cuts, council members said in interviews last week.

"I'm not expecting things to be as bad as we originally thought," said Councilman Ronald C. Dillon Jr., a Pasadena Republican. "This should actually be a quieter budget season than we had last year."

Council members warn, however, that although the county is likely to have enough money to operate without significant cuts, there will be little left for major initiatives.

"This is the year when we take time to finish the projects we've started, not start anything new," said Councilwoman Cathleen M. Vitale, a Republican from Severna Park.

County Executive Janet S. Owens and her staff have remained silent about the details of her proposed budget, which is scheduled to be presented tomorrow morning.

One possible source of contention could be a proposed income tax increase. Owens said in February that she would seek an increase from 2.56 percent to 3 percent, which would generate an extra $48 million. Under the increased rate, a household earning the median county income of $62,000 would pay about $275 more in county income tax.

A majority of council members have said they would not support the income tax increase. Most said the county is receiving enough money from the state that no tax increase should be necessary.

"I think we need to do the job with the money the citizens have already given to us," said Councilman Edward R. Reilly, a Republican from Crofton.

Budget officials had projected a $15 million shortfall but learned the county would receive its $7.8 million share of utility deregulation money from the state. "That alone could cure a lot of ills," Reilly said.

The county also has taken in almost $5 million more than it had at this time last year in revenue from transfer and recordation taxes.

Last year's process - which produced an $895 million operating budget - proved contentious, as the council scrambled unsuccessfully to avoid freezing salaries for police officers, firefighters and teachers. The major unions representing county employees have since negotiated new deals, and salaries are not expected to be much of an issue this year.

As usual, school expenses will make up the largest chunk of the budget. The Board of Education is requesting $664.5 million for operating expenses, up 5 percent from this year. That is $7 million less than Superintendent Eric J. Smith had requested.

The board's willingness to cut Smith's budget may save the county the trouble of making further school cuts, council members said.

"I'd like to see us fully fund their budget, because they made the effort on their own to re-evaluate their needs," Vitale said.

Council members also said they are eager to see how Owens plans to pay for 74 new firefighters, a staff increase agreed to as part of the contract recently negotiated by county officials and the fire union. County officials have said the new positions could cost as much as $4 million, but that may be largely offset by changes to departmental scheduling and leave policies.

"I'm looking to see the vacancies eliminated and the county to begin hiring firemen and police to get them back to full staffing levels," said Councilwoman Pamela G. Beidle, a Linthicum Democrat.

Council members offered optimistic views with the caveat that the county may have to absorb state cuts this summer.

"I hope the citizens understand that, at the state level, nothing's really been solved," said Dillon, alluding to the General Assembly's failure to make changes that would reduce the state's projected $800 million deficit for next year.

Uncertainty at the state level has created a familiar cycle in which county officials enter their budget seasons with bleak outlooks only to express momentary relief at not having to make major cuts.

Dillon said he is concerned that county residents will begin ignoring dire talk about the budget.

"I'm worried that they've started to believe we cry wolf every year," he said. "But the reality is that the problems at the state level will catch up to us eventually."

Many expect that reckoning to come before Gov. Robert L. Ehrlich Jr. presents his budget in January. Officials in Ehrlich's administration are talking about cutting state contributions to retirement payments for teachers, library workers and community college employees. Such cuts could add millions of dollars to county expenses.

Vitale predicted that cuts, combined with rising interest rates, might make next year the bad budget season council members have predicted.

Others warned that this year will be difficult enough.

"I'm still not looking forward to the month of May, even if the outlook is a little brighter," Beidle said.

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