The voter-approved ceiling on tax collection in Prince George's County will prevent the county, at least temporarily, from borrowing the money it uses to build new hospitals, schools and libraries, a boand specialist told the County Council yesterday.
Attorney George Hubbard, who handles the county's bond issues, explained to the council that along-standing provision of the county charter requires that any bonds issued to raise money for country projects be backed by "unlimited taxing power."
"TRIM [the charter amendment putting a ceiling on tax collections] had a said effect that no one thought of until afterwards," Hubbard explained. "It makes it impossible for us to sell bonds, because the security behind the bonds is no longer there."
"We'd have to tell our creditors that maybe we could pay and maybe we couldn't," added Council Chairman William B. Amonett.
After learning of the unexpected side effect of TRIM, the coucil hurriedly adopted a recommendation by Hubbard that the county ask the General Assembly for the authority to set up a special fund that would serve as security for new bonds.
The county charter provision requiring that bonds be backed by "unlimited taxing power" would be dropped and the fund could annual budget to ensure a reserve for paying bond principal and interest. The county has no immediate plans for a new bond issue.
Hubbard, who has the power to certify bond issues as legally valid, also told the council yesterday that TRIM could endanger the county's bond rating: the rating that indicates to investors how credit-workty the county is.
In the past five years, the county has sold two major bond issues, one for $30 million and one for $16 million.
The discovery that the TRIM charter amendment conflicts with existing provisions of the charter adds one more item to the growing list of complex legal questions brought on by the voters' approval of the ceiling on tax collections in November.
At the moment, four separate government agencies -- Prince George's County, two bicounty agencies and the state attorney ageneral's office -- are trying to sort out the legal tangle and decide what the vaguely-worded mandate means.
For instance, TRIM was designed to limit future property tax collections to the amount raise dby the county in fiscal 1979, but it is not clear whether the taxes raised by the county on behalf of the two bicounty agencies are included in this restriction.
Larry Taub, associate general counsel, of the Maryland-National Capital Park and Planning Commission has already issued an opinion arguing that TRIM will not affect the bicounty agency taxes. He bases his position on a 1976 Maryland Court of Appeals ruling that the agencies are not subject to county charter laws.
But three other opinions from the county, the bicounty Washington Suburban Sanitary Commission, and state attorney general are expected this week, any of which could come to the opposite conclusion.
Perhaps the most important issue being considered by the county is what county attorney Robert Ostrom calls "the whole issue of collections." TRIM LIMITS total property tax collections TO THIS YEAR'S FIGURE, BUT THAT TOTAL MAY VARY BY MILLIONS OF DOLLARS, DEPENDING ON HOW COLECITIONS ARE COUNTED.