Cumberland Times-News

February 10, 2013

In the red

Baltimore facing $745M deficit over next decade


Cumberland Times-News

— Baltimore is the proud home of the latest Super Bowl champions, but it recently got news that nobody should take as a source of pride.

Projections received from an outside firm indicate that unless things change, the city will accumulate $745 million in deficits over the next 10 years. When infrastructure needs and retiree health care benefits are factored in, that number grows to $2 billion.

Baltimore’s problems aren’t unique. Stockton, Calif., may be the poster boy for the phenomenon.

Stockton recently filed for bankruptcy and has chosen to protect public employee benefits and pensions rather than pay off some of the creditors who were foolish enough to lend it money in the first place.

Stockton now has more public pensioners than public employees, and some have multi-million dollar pensions. It also has spent far more than it should on public works projects.

Maryland’s government in general seeks to address budget shortfalls by raising taxes and fees and cutting outlays to counties and municipalities, while at the same time passing on to them some of the fiscal responsibilities it had shouldered — teacher pensions, among them.

Baltimore may not have that option. Its city property taxes are already the highest in the state, and its tax base has dropped along with a decline in its population from 950,000 in 1950 to about 619,000 today.

Such problems don’t happen overnight. They usually are inherited.

A few decades back, Cumberland’s Mayor and City Council passed an increase in water and sewer fees that outraged many citizens. The city fathers said previous mayors and councils had kept rates the same for many years in the interest of placating their constituents, but the financial shortfall could no longer be ignored.

When the District of Columbia reported a $700 million deficit in 1995, Congress created a financial control board that cut spending and assumed the district’s hiring and firing process. The district’s economy soon rebounded.

Baltimore is seeking ways to resolve its fiscal problems and return to solvency and prosperity. If it does, it will be a model for others to follow.