County's economy is called vigorous

Debt is up but shrinking as compared to income, citizen monitors are told

January 17, 2007|By Larry Carson | Larry Carson,sun reporter

Howard County's debt is rising, and is higher than what the county spends in local funds on its vaunted school system, but officials say there is no cause for alarm.

In fact, a county-sponsored citizens committee convened annually to gauge the county's economic outlook heard yesterday that Howard is growing vigorously in all the right ways. While the amount of debt is higher, it is shrinking as compared to total property values and annual tax revenue.

"The trend is going down," Ronald Weinstein, the county budget director, told the members of the Spending Affordability Committee at the group's first meeting in the county's Gateway Building.

Howard County's debt from bond sales rose nearly $51 million in the year ended June 30 to a total of $541.3 million. This fiscal year, the county budgeted $402 million for schools in locally raised revenue.

But Weinstein told the committee members that the debt, while rising in absolute numbers, is shrinking as a percentage of the value of property in the county -- the assessable base. The debt dropped from 1.8 percent to 1.73 percent of the total taxable base as of June 30. Also, compared to revenue, the debt dropped from 8.92 percent to 7.92 percent in one year.

"Revenue is the big one to us because that's what we're doing the budget with," Weinstein said.

Debt is rising, however, in two other comparisons that Weinstein said are less important in gauging the county's outlook.

Because population growth has slowed, each county resident theoretically owed $1,959 last fiscal year, up $160 from the previous year. At the same time, the debt as compared to personal income also rose slightly, from 3.43 to 3.68 percent.

What all of this means is a large part of what the committee must mull over in recommending how much money the county can safely authorize borrowing next budget year. The group's recommendations will go to County Executive Ken Ulman by March 1. Ulman then presents his first capital budget to the County Council about April 1, and his operating budget two weeks later.

Other issues also are important in the budget process, including the change in federal accounting standards that created an instant $477 million liability for the health benefits of future retirees and the school system's plans for renovations and new buildings.

"It might be good to have a discussion about what that really does mean," suggested Arnold Holz, a committee member and a certified public accountant. "We've seen those accounting changes come and go over time."

Last year, the Spending Affordability Committee recommended authorization for $90 million in new borrowing, based on predictions of steady economic growth. This year, an economist said, the county's growth likely will strengthen.

Daraius Irani, director of applied economics at the Towson University-based Regional Economic Study Institute, told the group that Howard County is ahead of state averages in a variety of economic growth measures, and he thinks things will continue improving as federal defense jobs begin filtering into the area under the Base Realignment and Closing (BRAC) plan, about 2011.

While cautioning that economic forecasting "is more of an art than a science," Irani said Howard County is doing well despite the soft housing market.

"Howard County remains a very premier place for households to move to. It's a magnet," he said, partly because of the school system's reputation for excellence. "We think Howard County will continue growing stronger than the state in all major categories."

Employment is forecast to grow 3.1 percent next fiscal year, compared wity 1.93 percent statewide. Personal income in Howard will grow 6.75 percent next budget year, compared with 5.4 percent statewide, Irani said.

Sharon Greisz, the county finance director, said the county sold $58 million worth of bonds in January 2006 and plans to sell another $61 million worth by the end of March.

Greisz said the bond sales represent authorizations from several previous years because projects such as highway improvements oftentake years to begin construction.

larry.carson@baltsun.com

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