- The Washington Times - Thursday, June 26, 2003

Prince George’s County is steadily narrowing the gap with more affluent counties. Residents’ active role in shaping policy through referendum coupled with sound management have improved the county’s prospects. In a Tuesday report, Fitch Ratings bolstered the county’s AA rating outlook to positive from stable, indicating that the county was on the right path for an eventual upgrade to AA plus.

In order to stay the course, attract new residents and investment, Prince George’s County must improve its public school system. The county will have met its court-ordered school construction requirements for neighborhood schools ahead of schedule by fall 2004. A memorandum of understanding reached in 1998 to eliminate the need for mandatory busing required the building of 13 new elementary and middle schools. The county plans to double that number. The county plans to build two new high schools and add 600 seats to six existing schools to address this gap.

The school board plans to cut $50.5 million in proposed spending. State aid is expected to be about $15 million per year going forward, less than the $35 million pledged by the state through 2007. To make up for shortfalls and address other costs, the county issued a bond offering yesterday of about $200 million.

The Fitch report was forthcoming in its praise. “The ‘AA’ rating reflects Prince George’s County’s stable and increasingly diverse economy, consistently well managed finances and moderate debt levels,” the report said. “The change in the rating outlook to positive from stable acknowledges that the county has now demonstrated its ability to operate effectively under tax limitations in both good and bad economic circumstances.” Fitch also implicitly commended county residents, by noting in a press release: “The county’s track record since the early 1990s of keeping expenditure growth within revenue constraints has been a key to its improved financial position.”

One likely vehicle is property taxes. Prince George’s residents, 25 years ago, petitioned and voted for a property tax cap. Known as TRIM, it sets a ceiling of $0.96 for $100 of assessed value (in comparison, Montgomery County’s property tax rate is $1.06 for $100 of assessed value). In November, residents also supported increasing the rainy-day fund to 5 percent of the budget, from 3 percent. These initiatives, according to Fitch analyst Joseph Mason, who wrote the ratings report, have given the county the discipline and prevented officials from overcommitting resources. But Mr. Mason added that unless the county is given additional flexibility to raise revenue, it will ultimately be prevented from gaining an AA plus rating, which would lower the cost of its borrowing.

County Executive Jack Johnson has said the county must find additional revenue. County residents have made wise decisions in the past regarding tax incentives. If they decide to alter or eliminate TRIM, so be it.

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