Towson's budget caution

April 19, 2007

The difference in fiscal management between Annapolis and Towson is that while state lawmakers may brag about how they've stopped digging a hole in the budget, Baltimore County Executive James T. Smith Jr. has gone a step further - he has started filling it in.

It may not grab headlines, but the $2.53 billion budget Mr. Smith submitted this week is as notable for what it excludes as for what it contains. It doesn't raise the county's property tax rate, and overall spending rises a reasonable 5.8 percent.

But more notably, the budget reflects important reforms in retiree benefits that the state and other counties ought to be pursuing as aggressively.

Three years ago, the nonprofit Government Accounting Standards Board set new standards for how jurisdictions must account for the growing cost of retiree health care. Baltimore County has set aside more than $100 million to reach this standard. Other jurisdictions have also socked away funds. But in this year's proposed budget, Mr. Smith has taken the additional step of reducing the cost of the county's health benefits package.

Here's the simple explanation: Thanks to changes the Smith administration has negotiated with employee unions in recent months, early retirement will not be as attractive an option as it has been. Workers won't be able to qualify for retirement health benefits with as little as 10 years of service. County workers with 20 years of service will have to wait to retire until at least age 65, instead of 60.

Even county police and fire personnel are affected by these sweeping changes. New hires will have to put in 25 years of service to qualify for retirement, not just 20. And there are a host of other changes to encourage county workers to stay longer that are likely to save taxpayers millions of dollars.

These are not easy reforms, but they were clearly needed. Without them, the county's favorable bond rating might be in jeopardy. That would raise borrowing costs, a significant expense for government. Another alternative (the choice of some other jurisdictions) would be to defer these difficult decisions - but that's an approach that is likely to compound the problem.

In light of the state's growing structural deficit and the prospect that state lawmakers will balance next year's budget, at least in part, by trimming aid to counties, Mr. Smith's cautious budget is right for the times - if not easily appreciated.

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