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Counties fret over deficit

The Baltimore Sun

OCEAN CITY -- Taking little comfort in Gov. Martin O'Malley's promises not to balance the state budget by shifting costs to cities and counties, local leaders are bracing for a fight to stop "doomsday" proposals that could saddle them with as much as $646 million in cuts.

The executives, commissioners and other officials at the Maryland Association of Counties convention here say the prospect that the state will slough off hundreds of millions in costs for teacher pensions on local governments at the same time that it cuts grants for public safety and other services is the No. 1 topic of conversation. O'Malley, a former Baltimore mayor, has been steadfast in his opposition, but the leaders of both chambers in the legislature say otherwise.

County officials said it's nice to hear support from the governor, but they're not counting on him carrying the day.

Baltimore County Executive James T. Smith Jr. said he'd like to see O'Malley include a proposal for some temporary cuts to local governments in his budget. That way, Smith said, the cuts would be designed by a former mayor who understands the needs of local governments and not by legislators who see the aid as just a line item to be slashed.

"The governor has been very consistent on this issue, but I don't have comfort because the General Assembly has been very consistent that local government has a role to play," said Smith, a Democrat. "I would rather have [O'Malley] consider that reality in his plan."

O'Malley reiterated his desire to spare local governments in his keynote address to the MACo conference, saying, "We are not going to solve the problem simply by passing it on to the county level."

"We're all in the same battle together, but we're not going to make a better tomorrow ... by laying off police officers, by increasing class sizes and by eroding the very quality of life we're all about," he said.

Sen. Allan H. Kittleman, a Howard County Republican and the minority whip, who attended the speech, said O'Malley's rhetoric is unrealistic, given that local aid -- primarily education funds -- makes up about 40 percent of the state budget.

"I would have liked to hear him acknowledge that," Kittleman said. "He missed a real opportunity to show some leadership."

Legislative analysts compiled a list of possible budget cuts recently, and aid to local governments topped the list of ways for the state to save money. They estimated the state could save $646 million -- nearly half of the state's $1.5 billion budget shortfall -- by cutting local aid or shifting responsibility for some programs to the counties.

Proposed cuts included passing on to counties half of the responsibility for teacher pensions, which would save the state $324 million next year; freezing education aid, a $137 million cut that could result in larger class sizes or lower teacher salaries; and eliminating law enforcement grants, which are budgeted at $44 million.

Legislative leaders acknowledged at the time that the exercise, known as a "doomsday budget," was in part an effort to show how unpalatable it would be to fix the deficit through cuts alone.

But analysts included some extra information in their briefing packet to suggest that the cuts to the local governments might not be so bad. One sheet showed how much reserve cash counties have built up in recent years. Another showed how many of them have cut taxes in the last two years. Of the state's 23 counties and Baltimore City, 17 cut property taxes this year, and 13 did so the year before.

The analysis also pointed out that 17 counties gave their teachers raises of 4 percent or more last year and seven did so the year before. Eleven of them gave similar raises to general county employees this year, too.

House Speaker Michael E. Busch said that unless the state is willing to stomach enough tax increases to fill the state's budget hole, local governments will have to be part of the solution.

"I don't see any scenario where if there aren't further revenues or some kind of miraculous increase in the funding projections that the budget isn't going to reflect cuts to local government," said Busch, an Anne Arundel Democrat who works for his county's recreation and parks department.

Senate President Thomas V. Mike Miller said "there's no question" that local governments are going to see their aid cut. The pay raises that counties have given their employees and the reserve funds they've amassed show they can handle it, Miller said.

"The state is now $1.5 billion in debt because of the largesse we sent to the counties, and when the sun shone, we were able to do this," Miller said. "But when the rains come, they're going to have to bear some pain."

The state's problems, local officials say, are of its own making, and they're ready to fight proposals to cut the aid they've come to rely on.

"It's just irresponsible," said Frederick County Commission President Jan H. Gardner, a Democrat who is also the president of MACo. "Seventy-five percent of what we do is public education and public safety. People want good public education, and they certainly have an interest in public safety."

There's good reason for local governments to worry. During the last major state budget crisis, in the early 1990s, the state passed along hundreds of millions in cuts and new expenses to the counties, forcing many to increase taxes. By 1994, a full-scale tax revolt was under way, with voters pushing for tax caps.

In Anne Arundel County, for example, strict caps on property tax assessment increases have limited new revenues and put that government in a budget pinch.

David Bliden, the executive director of MACo, said the other reason counties might have a harder time weathering cuts now is that local governments have more complex -- and costly -- responsibilities than they did then. Fire departments have become primarily medical service providers. Police departments are fighting organized gangs. And homeland security requirements have put an increasing strain on local governments, he said.

"What health departments do now is dramatically different from what they did a decade ago," Bliden said. "Now the county health department deals with anthrax, with pandemics like the bird flu, with the rise in autism. These are things county health departments didn't have a decade ago."

Not everyone in the legislature thinks the counties should share in the state's pain. Del. Murray D. Levy, a Charles County Democrat and a former county commissioner there, said it was appropriate for counties to bear part of the responsibility in the early 1990s because that shortfall was caused by a sour economy. But this time, he said, the problem is the result of decisions to cut income tax rates in 1998 and to enact a major education spending program in 2002 without a corresponding funding source.

"They haven't done anything wrong," Levy said. "The fact that their budgets are in good shape is no reason to cut them."

Harford County Executive David R. Craig was a legislator in the early 1990s, and he said he understands the current lawmakers' motivations. He was a former mayor then and opposed the cuts, but he said there wasn't much that could be done then, and there won't be much to stop legislators now.

"It doesn't keep me up at night because they're going to do what they're going to do," said Craig, a Republican. "I tell people the Harford County government will open the next day, just like it did the day before."


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