When Prince George's County budget experts heard news of President Reagan's proposed budget cuts a few months ago, they were stunned. A tax freeze has left the county with no excess money to absorb the loss of federal funds.
When Montgomery County officials heard the same news, they simply took out their pencils. They added $5 million to next year's budget, to be used if Congress goes along with Reagan's request to end revenue sharing, and $3 million, in case mass transit subsidies are killed.
And they still had enough cash left over to increase Montgomery's rainy day reserve fund from $11 million to $19 million.
The Reagan proposals do not pose a problem to Montgomery County, according to Management and Budget Director Jacqueline Rogers. "Montgomery County has a booming economy and only a 2.9 percent unemployment rate," she explained. Rapid commercial development and rising property values mean that revenues are growing, and they are expected to top $1 billion by next year.
The different reactions show the widely divergent impact Reagan's proposed cuts could have on the local governments across the country. They also underscore the fears of some city and county officials that such cuts would spawn a sort of economic survival of the fittest.
Federal budget director David A. Stockman has labeled local government one of the "six sob sisters of subsidy," and he has targeted billions of dollars in local government programs, including revenue sharing and mass transit subsidies.
Stockman says the proposed cuts are justified at a time when the federal government has a $200 million annual deficit and many local and state governments have surpluses.
Stockman's critics counter that the cuts will fall unequally.
Thomas Muller, an Urban Institute economist, says that the older cities and poorer counties would be the hardest hit. The wealthier suburbs and the economically growing regions, particularly the Southwest, would survive quite easily. In fact, he adds that the cutbacks would "increase the disparities" between the poor and wealthy regions.
Officials in Prince George's, Arlington, Alexandria and the District say the cuts, especially loss of revenue sharing, would be disastrous for them. Prince George's Executive Parris N. Glendening said the cuts "would do serious harm to those programs most in need, such as education, transportation and aid to the elderly."
District officials say they are counting on the $17.7 million they get in revenue sharing to pay for improvements in crime prevention, firefighting, teacher pensions, road repairs, public assistance and mental health next year.
But in the Washington area's two most affluent jurisdictions, Montgomery and Fairfax counties, officials say they would barely notice the loss of revenue sharing. The 1981 federal cuts had little effect on their budgets, they say, and neither would these.
By a 5-to-2 vote, Fairfax supervisors even defeated a resolution recently that asked that revenue sharing be kept around for at least one more year. Most supervisors said that the deficit should be Congress' top priority.
"Besides, I've always subscribed to the philosophy that the federal government doesn't really have any revenue to share," said Supervisor Thomas M. Davis. "They take it from our citizens . . . . They're taking it from one segment and distributing it to others; only some of it filters down here."
Fairfax is experiencing an economic boom, with substantial commercial development and rising property values. Revenues are expected to increase by $84.6 million next year. The county has a $14 million budgeted reserve this year, plus $5 million in unexpected surplus. The county board is considering a reduction in the real estate tax rate.
If the Reagan cuts are approved, the county would lose $7.9 million in revenue sharing funds -- a loss that County Executive J. Hamilton Lambert said "would not really be devastating."
James P. McDonald, the county budget director, goes further. "If they literally wiped out the whole thing the entire $48 million the county receives in federal funding ," he said, "we could handle it."
Not even Reagan has proposed wiping out all the federal grants, and Fairfax officials share the view of many congressional observers that the domestic spending cuts will be far less dramatic than what Reagan has proposed. McDonald says that whatever is cut can be replaced rather easily. He expects few programs to be dropped.
"If the board is committed to a program, they'll fund it. If the federal money is there, that's all well and good. They'll use it," he said.
Scanning a list of current federal grants, McDonald pointed to a program providing day care for children suffering from family neglect or abuse. "My lord, that's only $63,000. With a $1 billion budget, we should be able to find money for that," he said.
During the last round of major federal budget cuts in 1981, Fairfax joined other local governments in protesting the reductions. But the county later discovered that the reductions had little effect on the county budget, according to McDonald. As an example, he pointed to cuts in impact aid -- educational subsidies for areas with large numbers of military and federally employed families.
"When the federal government cut back on impact aid we screamed and yelled," because Fairfax's share dropped from $20 million to $3 million, said McDonald. But the county had no problems adjusting to the cut, he added.
Montgomery County is in a similar position, with a healthy economy and 7,000 new jobs annually. Rogers said the 1981 cuts "caused no serious problems," although the county did have to drop one major program -- job training funded by Comprehensive Employment and Training Act (CETA).
But other federally funded programs were continue despite a loss of funds. In one program for juvenile offenders, for example, Rogers said the county reduced costs by eliminating people who did the federal monitoring and some other administrative positions. She said all of the counselors and service people were kept.
While Prince George's and the District apparently would be the hardest hit by the cutbacks in the metropolitan area, Arlington and Alexandria officials say they also would be hurt.
Arlington Budget Director Mark Jinks said that if the economy stays healthy the county budget will be fine this year. But the loss of revenue sharing funds would eat into the $2.3 million operating reserve and force a tax increase within a year or two.
Alexandria would also be in a tight spot, according to budget analyst Howard Kunik. The city has a modest $1.4 million reserve, about half the $2.2 million it receives in revenue sharing.
"We're obviously not as wealthy as Fairfax and Montgomery County," said Kunik, "but obviously we're also not as poor as Detroit. So we fall somewhere in between."