Howard County and Central Maryland will be "awash" in new jobs in about two years, but that won't help balance the county budget next fiscal year, economist Anirban Basu told Howard County's Spending Affordability Committee on Thursday.
The committee, composed of county officials, accountants, bankers, business people and academics, meets annually to recommend spending and borrowing levels for the county executive, who must propose a budget in mid-April.
This year, said county budget director Raymond S. Wacks, presents an unusual problem for the citizens advisory group.
"The real question is, after the year we've had, are the [standard] assumptions still valid?" Will family incomes and housing prices rise to former levels in a few years, "or has there been a fundamental shift?" he asked.
Basu, a principal at Sage Policy Group, had a firm opinion, though he admitted he is no seer.
This recession has been "much deeper and more profound" than earlier ones, he said, and a "lull" or "weakening" might occur next year after the first blush of recovery. This recession has been "unprecedented," he said. Still, he predicted that "by mid-decade, Howard County will be awash in jobs. It sounds strange to say that," he admitted.
But the federal defense jobs buildup around Fort Meade, especially with the cyber-security issue likely to spark a huge surge in federal employment, personal income growth "might hit an all-time record" in fiscal 2012.
Ever mindful of local revenues, Wacks then asked "if jobs grow, what happens to housing?"
Basu said inventory of homes for sale is already down to a six-month supply in the county and things will stabilize, though it may take years to fully recover.
Kevin Bell, whose family operates Win Kelly Chevrolet in Clarksville, said he's seeing drastically lower commercial real estate values lately, but also said his dealership has seen a brisk trade in new vehicles over the past three months, mainly from people shedding older cars who have postponed purchases.
Basu said that as current leases expire, commercial real estate may see more of a downturn in the short term, and hotel occupancy rates remain very low, but he remains optimistic about the general outlook for Central Maryland. Still, he said, more new jobs in two years "does not matter" to the county, which has to balance its budget every year. Wacks said personal income growth also won't produce higher revenues for some time after that upward trend begins.
Still, that optimism, and the possibility of rising interest rates as the economy recovers, led school board member Frank Aquino to suggest that the county borrow more money by selling bonds to do needed school renovations while construction costs are also down.
"We need to invest now," he said.
Todd Snyder, another member, agreed.
"Borrow as much as you can now," he said. Basu seemed to agree, noting that Howard is among the wealthiest places in America.
But Howard Bank President Mary Ann Scully warned that the county must have the revenue to pay for added debt, and Wacks said significantly boosting borrowing would also later boost the county's debt interest payments.
"This deserves a whole lot of analysis. It's not simple," said Barry Curtis, another committee member. County finance director Sharon Greisz also noted that it's impossible to get ahead of school construction needs. "You find there's another need. It never goes away."
Wacks said the other variable this year is the county's $48 million rainy day fund, and the coming decision for county Executive Ken Ulman about whether to use any of that money to ride out the recession.
"We're looking at no net new revenue growth" Wacks said, and Greisz said the county is about to sell $100 million in bonds, which means higher debt servicing costs.
The committee is to meet once a week into February, and then produce recommendations for Ulman's guidance.