City officials encounter bumps as they trim long-term deficit
By By Luke Broadwater and The Baltimore Sun
Mar 17, 2014 | 9:16 PM
The Rawlings-Blake administration's efforts to slash Baltimore's long-term deficit has run into a bump — more than $100 million in new police, education and other expenses now expected over the next decade.
The school system is billing the city for more students than expected — at a cost of several million dollars a year. The enrollment figures are wrong, school and city officials agree, but under state law, the city still has to pay a bill that could come to $43 million.
Settlements of lawsuits against the Police Department and increased landfill costs are among other expenses that were not anticipated in the fiscal plan. Baltimore finance director Harry E. Black has a nickname for the millions in surprise costs: "the creep factor."
"We've got to be vigilant with our fiscal discipline to mitigate that creep," he says.
Says Andrew W. Kleine, the city's budget director: "We swim upstream when you have new costs come into play."
Nonetheless, administration officials say they have cut the city's long-term deficit — once projected at $750 million over 10 years — by about $300 million. The mayor says she's proud of that figure. But it is smaller than budget officials had envisioned.
"When I first started talking about these issues, people thought it was theoretical," Mayor Stephanie Rawlings-Blake said of the long-term cost-cutting. "And then Detroit happened. It was no longer just a possibility. It was a reality that a large city was facing. It was a wake-up call to everyone. We can't do this to our kids and our grandkids. For me, I wasn't going to wait until Baltimore had a Detroit moment before I acted."
Ways of cutting further into the 10-year gap are likely to be seen as the mayor releases her budget plan this week for the fiscal year that begins July 1.
Already, the mayor and the City Council have enacted a series of measures aimed at preventing Baltimore from facing bankruptcy like other cities, notably Detroit. A year after a consultant's report revealed Baltimore faced a $750 million deficit over the next decade, administration officials said they thought they'd filled about $400 million of that hole through new fees and cuts to workers' benefits. Among them are sweeping changes to city workers' health care and a longer work schedule for Baltimore's firefighters.
The city is expecting to generate more than $100 million over 10 years from a new stormwater management fee — which opponents deride as a "rain tax" — and to save $80 million by requiring city workers to contribute to their pensions. City officials say they've been able to save $29 million by kicking about 1,500 ineligible people off the city's health care rolls.
Each move sparked outcry, and some members of the City Council say they think finance officials are playing Chicken Little with talk of impending budget doom.
Councilwoman Mary Pat Clarke says she's not keen on plans to cut benefits to city workers any further, even if they come with pay raises. She notes the City Council has passed a balanced budget every year — and city workers have already been hit hard.
Councilwoman Helen Holton, chairwoman of the budget committee, said she doesn't necessarily trust long-term projections. Holton said she's more concerned with the poorer workers in the city, many of whom make less than $40,000 a year.
"It's real easy to make cuts when you're putting pen to paper without considering the impact to people's lives," she said.
City Councilman Brandon Scott said decisions to shrink city government are never popular but necessary."I'm happy we're dealing with the long-term fiscal health of the city. It's not something anyone wants to do, but we can't make the same mistakes our predecessors did."
Scott said he is concerned that the school system had miscounted students, and with the costs of lawsuits against the police because they could force city government to cut elsewhere. He said he wants to make sure groups already hit with cuts wouldn't be unduly hit again.
Baltimore school officials said in December they made a $2.9 million error after they reported inflated enrollment numbers last year. Kleine said the impact of the over-counting could hurt the city for years to come unless the Maryland Department of Education grants a waiver from a law requiring payment. Likewise, the city is now anticipating $22 million more in expenses from police lawsuits over 10 years, Kleine said.
Last year, a study by George Mason University of six cities in "fiscal distress" concluded that Baltimore is on "reasonably solid financial footing" — in part due to sound financial decisions and strong state aid. The researchers also cited Rawlings-Blake's tackling of the long-term fiscal deficit.
Black touts that study and says the city's push for reining in costs is just the beginning. He notes that other cities studied have richer tax bases, but worse bond ratings.
"You've got some cities that are behind the curve," Black said. "We're not ahead of the curve, but we're poised to get in front of it if we do the right things."