In Howard, seeds of optimism

Just as the first green sprouts of spring give rise to optimism for better days ahead, there are hopeful economic signs in Ellicott City, where Howard County Executive Ken Ulman this week proposed a budget that — wait for it — anticipates growth.

Not a lot of growth, admittedly, but it's arguably the most optimistic government budget to be offered by any Maryland county this year. In this, Howard may prove to be a reverse of a canary in a coal mine, finding oxygen where others are still holding their breath.

What makes Mr. Ulman's $1.56 billion plan notable is not just that it anticipates a 5.6 percent increase in county-generated revenue. A portion of that is made possible by a planned increase in the hotel occupancy tax from 5 percent to 7 percent, a move already approved by the Maryland General Assembly. Other jurisdictions plan to raise taxes and fees, too.

But what may make the county unique is buried a bit deeper in the document: An anticipated 4 percent increase in income tax receipts without any change in rates. That's the most optimistic projection a Maryland county has made in several years.

That's not just some wishful thinking but experience talking. In the current fiscal year, the county is collecting 7 percent more in income tax revenue than the year before. That makes a 4 percent projection actually quite conservative.

None of which is to suggest these are times of milk and honey. Mr. Ulman is using much of the new revenue simply to maintain the status quo, fully funding education, for instance, but not to give a cost-of-living pay increase to county employees. (County workers will, however, effectively see some boost in their income with the end of furloughs.) The budget would preserve the county's coveted Triple-A bond rating.

Howard, like other Maryland counties, derives the largest share of its tax revenue from property taxes, and there the news is not quite so good. Falling real estate prices are having their effect: Revenue is flat and could remain so for several years to come.

Nevertheless, Mr. Ulman is using his modest gains to good effect, investing more in storm water management (as state and federal regulators are pushing as part of the Chesapeake Bay cleanup), economic development and tourism (as the hotel tax increase mandates) and social service agencies. All are likely to improve the quality of life for county residents.

Admittedly, Howard is by some measures Maryland's most affluent county (on a per capita basis) and has the lowest unemployment rate of any jurisdiction (tied with Montgomery County at 5.1 percent in February, or 2.2 percentage points below the rate statewide). If any economic recovery was going to be felt in this state, it would start there.

And Maryland's economy could certainly run into deeper trouble. Higher oil and gas prices, a shutdown of the federal government or even interruptions in the supply chain caused by Japan's disasters (at least to the extent it impacts the national economy) could put the brakes on recovery.

But Howard County's economic optimism may yet prove contagious. The Maryland comptroller's office reports income tax withholding was up 6.5 percent in the first quarter compared to one year ago. State income tax returns haven't all been counted yet, but many suspect they will show collections for 2010 are higher than expected. Tax revenue is growing in a broad variety of categories, albeit below the 2007-2008 peak.

That may not be reason to uncork the champagne, but in the cool, wet spring of 2011, it provides ample reason to believe that warmer days are ahead.