Deficit forecast looks bleaker Budget chief sees $20 million hole

Budget Director Raymond S. Wacks told County Executive Charles I. Ecker last week that if he thinks the county's $8.2 million deficit is bad, just wait six months.

When Mr. Ecker starts preparing his new budget in March, he will start with a $20 million hole, according to Mr. Wacks, and no way to fill it short of radically cutting services or radically increasing taxes.


A huge tax increase is unlikely, Mr. Ecker said.

"We're going to do everything we can short of shutting down county government not to raise taxes and still maintain the health, education, welfare and safety of the county," Mr. Ecker said.


"I don't think citizens are going to say, 'Raise our taxes to do whatever you want.' If we continue to raise taxes, we'll see something on the ballot" similar to the tax-limiting proposal passed Tuesday in Anne Arundel County, he said.

The measure will cost Anne Arundel $15 million in fiscal 1994, Mr. Ecker estimates.

If taxes are not going to be raised, the only way to make up the difference is to cut services. Mr. Ecker will be looking for suggestions from residents as to which services they can do without. Hearings on the budget begin Dec. 10.

Mr. Ecker said he will be asking department heads to put a price on services so he can tell residents: "Here's what we do -- provide food service for the elderly, grants for the homeless, public education, police and fire service, recycling, trash pickup. To continue what we do, here's what its going to cost.

"We need to provide options for people to consider," he said. "If you're on the outside looking in, you wonder how much fat is left and have they cut enough."

The $20 million gap between revenues and expenditures that Mr. Wacks is forecasting includes the $8.2 million the state is trimming from this year's budget -- money that won't be coming back.

In addition, the county will have to provide for two new schools, two new libraries, a combination police and fire station, a new county office building, an increased recycling program, and an expanded storm water management program. The increased recycling and storm water management programs are mandated the state.

The expected deficit could grow larger once Board of Education requests, employee salary demands, and program requests from department heads are added to the budget.


The revenue outlook is bleak. If the county turned to property taxes as a solution, it would have to raise the property tax rate 14 cents just to cover this year's losses in state aid. The county raised the property tax rate 14 cents Mr. Ecker's first year in office to cover earlier cuts in state aid. The property tax rate now is $2.59 per $100 of assessed value.

To cover a $20 million addition to the budget, the county would have to increase the property tax rate 34 cents. If it did that, the owner of a $200,000 house would be paying $264 more in property taxes next year.

"We have pretty much exhausted our resources," Mr. Wacks said. "We have no more special funds to be tapped, no more maintenance to be deferred."

The property tax and income tax revenue outlook for the coming year is dismal, Mr. Wacks said. He projects a 5 percent decline in commercial assessments, a 2 percent annual increase in residential property tax assessments, and a 4 percent increase in local income taxes.

In prior years, residential assessments, which account for 77 percent of the county's property tax base, had been growing at an 8 percent rate.

Property taxes account for 55 percent of county revenues. Local income taxes make up another 33 percent. The remainder comes from various fees and charges and from state and federal grants.


The county has raised 35 fees and charges in the past three years, some more than once.

"There's not a lot of capacity left in those fees," Mr. Wacks said. "What we face is a re-evaluation of what we do and whether we can continue to afford to do it."

Meanwhile, the county should escape from this year's fiscal crisis without cutting services or reducing the county work force, Mr. Ecker said.

The state cut $1.3 million in July and Gov. William Donald Schaefer asked for $6.9 million more in October.

The governor planned to get the October money by eliminating state payment of Social Security taxes for teachers, library and community college employees.

Although the legislature has yet to agree to the governor's proposal, Mr. Ecker knows the county is going to lose at least $7 million regardless.


Mr. Ecker will not lay off or furlough employees, he said, unless the state slashes even deeper. "If there are additional reductions above what we think, I can't guarantee there won't be any layoffs or furloughs," Mr. Ecker said.

He said that he favored the governor's Social Security proposal -- a measure school Superintendent Michael E. Hickey has called unconscionable -- because the president of the state Senate and the speaker of the House of Delegates have signed a pledge not to cut county aid further this fiscal year if counties ac

cept the Social Security cut.

Initially, the county was to receive $85 million from the state this year, all of it in restricted funds -- $69 million for the Board of Education, $1.5 million for police protection, $6 million in gas tax money for highway users, and $7.7 million to $8.5 million for the community college, the health department and the library.

Since the state can only cut from restricted funds, Mr. Ecker says he will follow the same budget-cutting approach regardless of what the legislature decides.

"The Board of Education will take a $5 million hit," he said. "I believe they have a $3 million surplus [from fiscal 1992] based on their audit and I've told them this."


The county government side of the budget will absorb a $2.5 million loss, Mr. Ecker said. "We're going through our budget right now, and I've asked for a reduction plan equal to 5 percent from every department. I've asked for 1 percent blocks so I can pick and choose. Some departments will have a zero cut, some 5 percent. The average will be 3 percent."

The county will not discover how much state aid will be cut until after the General Assembly convenes in January.

Mr. Ecker will receive fiscal 1994 funding requests from department heads in mid-March. The new fiscal year begins July 1.