Budget woes fixed in counties as Baltimore struggles

Despite big revenue shortfalls, Baltimore-area counties seemed to breeze through their financial travails this spring, shifting money around, avoiding layoffs and tax rises and plugging holes in the coming year's budgets in ways that few residents will notice.

Meanwhile, Baltimore City officials continue to bicker over a proposed package of $50 million in new taxes and $70 million in budget cuts likely to lead to at least 250 layoffs. Although the fiscal year ends June 30, city officials have yet to settle on a spending plan for the year that begins the next day.

While every jurisdiction is facing revenue declines as a result of the national recession, this year's budget season illustrates how the city — with its smaller tax base, greater pockets of poverty, already high property tax rate and more critical needs for public safety forces — has a harder time making up those deficits.

Mayor Stephanie C. Rawlings-Blake gets sympathy from surrounding county executives who have balanced their fiscal 2011 budgets while she still is trying to manage the same feat. As one county executive says, she's had less time to wrestle with the issues, coming into office just three months ago after the forced resignation of her predecessor, Sheila Dixon.

"Stephanie had to take office in the middle of the whole situation," Harford County Executive David Craig, a Republican, said about Baltimore's Democratic mayor. "In February when she was sworn in, I was making final [budget] decisions," he said.

Craig faced a $12 million revenue gap this fiscal year, but he eliminated it with five furlough days, 34 layoffs and no pay raises for county workers. For fiscal 2011's budget he postponed equipment replacement, canceled training, and held vacant jobs open, which allowed him to lower the county's property tax two cents for fiscal 2011. For the the first time in 37 years, the county met the so-called constant yield tax rate that produces the same amount of revenue as the previous fiscal year. His no-layoff, no-furlough budget was approved by council members unanimously.

"It was probably the easiest budget to get approved by the County Council, but one of the hardest to create," Craig said.

Baltimore County Executive James T. Smith Jr. made eliminating a $162 million gap look easy. He took $118 million in cash from capital projects that could be delayed, and $40 million from health insurance savings, plus $4 million from unspent monies and the rest from surpluses while also getting key public safety unions to agree to two years without raises and higher pension contributions in exchange for no layoffs.

Smith left his successor an $80 million cushion for fiscal 2012 and took off on vacation before the County Council took a final, unanimous budget vote Thursday to approve his plan.

"It wasn't about cutting services to citizens," said Don Mohler, Smith's spokesman. "Citizens won't see any drop-off."

But officials said that although the solutions may have seemed smooth on the surface, lots of hard decisions and years of earlier cuts and preparation went into them. "Two years ago, we made very difficult decisions" on employee pension reforms designed to cut future liabilities, Mohler said.

"We were able to bring it together without catastrophic things happening," said Ted Zaleski, Carroll County's budget director, about closing a $10 million budget hole this year. The county canceled some capital projects, and eliminated 93 county jobs.

In Anne Arundel County, executive John R. Leopold told employees to take 12 furlough days to help balance his budget, but he credited three years of cost-cutting for the lack of disputes this year. The cuts he did make came in areas not easily seen by the public, like savings in health insurance, and collaborative reductions negotiated with county unions.

Leopold also got unanimous council budget approval this election year, covering a $25 million gap in the fiscal 2010 budget and a projected $95 million revenue shortfall for fiscal 2011. "We slammed on the spending brakes," said John Hammond, Arundel's longtime budget director.

In Howard County, executive Ken Ulman plugged a $19.6 million shortfall before proposing a budget the five-member council approved 4-1 with little real controversy.

"We've been very strategic about the places we've cut," Ulman said, adding that he has cut other programs, such as cell phone expenses and take-home vehicles, to achieve savings.

In the city, crafting a budget and getting it passed has gone less smoothly. Rawlings-Blake initially produced what has become called a doomsday budget, a spending plan that, without new sources of revenue would have required massive cuts to police, fire and other essential services.

Then she introduced a $50 million package of new or increased taxes, which she said would lessen the blow, but the City Council has resisted passing it as proposed. Instead, some members have offered alternatives, and negotiations over the budget continue.

Hundreds of city residents packed a recent budget hearing to beg for funding for police, fire, recreation centers and other programs that were deeply cut in the preliminary budget. The opponents of a four-cent tax on bottled beverages have been particularly vociferous, filling air waves and newspaper pages with ads condemning Rawlings-Blake's proposal.

City budget director Andrew Kleine said the city had to first close a $50 million shortfall this fiscal year, which meant cutting 500 vacant city jobs. After that, there was not much left to cut despite a projected $121 million shortfall for fiscal 2011.

"You can't cut vacant positions twice," Kleine said ruefully. "We see this as a multiyear process."

Economist Anirban Basu said the city has "special issues and a different tax base," making it hard and unfair to compare its budget-balancing struggles with the counties.

Burdened with a much smaller tax base, higher unemployment, concentrations of poor residents and a property tax rate double Baltimore County's, resources go mainly to public safety and schools, meaning that significant cuts will be quickly seen and felt by the public, he said.

In the suburbs, officials are "much more likely to cut programs to improve the quality of life on top of an already good quality of life," Basu said. With the city's focus on public safety, it is harder to cut without affecting vital fire stations and police on the street, he added.

The city's property tax rate is already the highest in the state, and more than a third of the city's revenue is derived from that source. "The counties have a larger tax base," said Baltimore City Council President Bernard C. "Jack" Young. "They don't have the same dependency on property tax that we have."

Howard budget director Raymond S. Wacks is uniquely positioned to compare the city and counties, having held the same job in Baltimore from 2005 until 2007. "A lot of the [city's] real estate boom was investor-driven," Wacks said, "so when the bubble burst, the drop in values was steeper in the city."

Similarly, City Councilman James Kraft, a former Howard resident and once a County Council candidate, noted that the city's assessable tax base is less than half of smaller Howard County's, while roughly a quarter of city residents have incomes below the poverty line.

"We have the bulk of the budget borne by two-thirds of the people," he said.

As a result, city officials are united on one issue — Baltimore's property tax rate can't be raised. But they still are seeking consensus on exactly where to get the revenue before a final vote June 24.

And while the counties have seen their way through the coming fiscal year, even they are saying their worries aren't over. County officials said they've left dozens of needed jobs vacant, and cut costs in ways that can't be sustained over many years, which makes them apprehensive about the future.

Much of that apprehension centers on expectations that the General Assembly next year will push off some teacher pension costs on local governments to help alleviate the state's looming $1.5 billion revenue shortfall.

"I don't think local governments have the ability to absorb that cost without cutting education or raising revenues," Wacks said.

Carroll County's Zaleski agreed. "Our big concern is what the state's going to do next year," he said. "Recovery is not around the corner for us. This is not hanging on for a year or two. This is a fundamentally changed situation."


Sun reporter Julie Scharper contributed to this article.

Copyright © 2020, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad