State payments eliminate Baltimore County deficit


Unexpected new state revenue payments have erased a $3.9 million deficit projected for Baltimore County this budget year. But a $15 million deficit still is projected for next year, and things don't look bright for the future.

The good news is that the deficit projected for the current fiscal year, which ends June 30, has been erased. There are two reasons.

First, the state notified the county last month that it had underestimated the amount of income taxes the county was due last fall. The comptroller's office said the processing of an unusually high number of tax returns was delayed because of extensions requested by individual taxpayers and by state tax law changes in 1993.

"We got back money that was due us in September," county Budget Director Fred Homan said. That payment alone gave the county $5 million more than it had expected.

Second, the fourth-quarter distribution of local income taxes was about $900,000 higher than the latest county estimates.

The two payments combined exceed the projected deficit by about $2 million, but Mr. Homan said variables in the budget could affect that amount by the end of the fiscal year.

The budget director warned that the short-term good fortune from the one-time windfall won't help in fiscal 1996 or beyond.

Statewide, income tax revenues increased 4.4 percent in the last quarter of 1994, compared with the same quarter in 1993, but Baltimore County's increase was 1.9 percent, the third-smallest among Maryland's 24 subdivisions. Only Dorchester County and Baltimore had smaller increases. Growth rates in the other six large suburban counties ranged from 4 percent in Montgomery County to 9.8 percent in Carroll County.

"It's not good news," Baltimore County Executive C.A. Dutch Ruppersberger III said of the county's long-term picture. "It shows we're not growing at all."

The county has to retain more middle-income taxpaying homeowners and attract businesses "or we're going to continue to regress," Mr. Ruppersberger said.

He and Mr. Homan said the county will have to make up with spending cuts the $15 million deficit projected for next year, since revenues aren't going up appreciably.

In a letter to the executive and County Council, Mr. Homan noted that the income tax windfall came after the comptroller's office had said in September that income tax revenues would be much lower than expected.

The fluctuations in state estimates prompted an indirect plug in the budget director's letter for keeping the county property tax intact.

"Once again, the volatility in income tax receipts and distribution highlights the need for maintaining both a diversified revenue stream and a cautious approach to revenue forecasting," Mr. Homan wrote.

Mr. Ruppersberger already has said he plans no general pay raises for county workers next year and has ruled out a property tax increase. With no property tax increase, the only ways county revenues can grow to meet inflation are increases in incomes and real estate transactions.

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