Tax rebellion!

October 17, 1990

Imagine that your boss asked you to sign a lifetime contract that limited your salary increases to 2 percent a year. No matter that your workload increased. No matter that the tuition rose at your daughter's college or that the old clunker broke down and you had to finance a new car at 12 percent. No matter that BG&E raised your utility rates. Take the 2 percent annual raise or find another job. What would you do?

The question is, of course, rhetorical; no rational person would agree to such terms. Nonetheless, this is precisely the kind of constraint Baltimore County government could be hamstrung with if voters pass the tax cap referendum. Actually, there seems to be some confusion on this point: The proposal is NOT a 2 percent cap on assessment increases. It is a limit on the total dollar amount the county can collect from all business, commercial and residential property taxes -- 2 percent more than the year before.

The febrile prose of the advocates is rooted in the Reagan traditions of disdain for government and the fantasy that we can have all kinds of services without paying for them. Moreover, theirs is the purest penny-wise, pound-foolish mathematics an accountant could deliver.

In fiscal year 1992, the cap translates into a projected revenue loss of $20.3 million. Those who fiercely sermonize on waste in government insist $20 million in fat can be cut from current spending. Maybe. But that's misleading. The county's built-in costs -- Social Security and health insurance contributions for county workers, increased gas and electric costs and liability insurance, for instance -- are expected to add $45-50 million to the budget next year. That, coupled with the $20 million, represents a shortfall of as much as $70 million, which translates into real cuts in agency budgets of 3.5 percent. And that's just year one. The anticipated revenue loss from the 2 percent cap is expected to double by 2000 -- to $41 million, while built-in costs will rise at a rate that no one can anticipate.

Add to that federal parsimony, and the slew of new mandates from Washington and Annapolis with no dollars attached (clean the water, recycle the trash, run drug-treatment programs) and even a trickle-down loyalist can project the sorry outcome.

Baltimore County already ranks below the state average in per capita spending. Ask a teacher whether it is possible to make these kinds of cuts and still provide the same level of service. Ask a firefighter. Or a police officer. Better yet, ask the people of Prince George's County who voted for a similar cap in 1978, then retrenched upon discovering that school class sizes hit 40 and police couldn't come quickly when residents called for help.

Less politically sexy but equally important is that the cap could downgrade the county's triple-A bond rating which is, ironically, a recognition of excellent fiscal management and which allows it to borrow money at a cheaper rate. That would force local government to pay more for debt service. Projects on line would have to be scaled back, and the hoped-for new school roof might never materialize.

. . . who will benefit?

Perhaps the most insidious part of the tax rebellion is the populist prose in which advocates couch the debate. The reality is that the cap will force those voters who have faced the roughest times in the '80s to take a disproportionate hit. Since the 2 percent cap limits the total dollar amount collected, increases in assessment alone will require a reduction in the property tax rate. But while the owner of a $130,000 home, for instance, would realize an estimated property tax reduction of $78 next year, the owner of a $62,000 town house would save $37 -- about what it costs to take the family out to Sizzler. More than that, those who receive the least benefit will feel the pinch the most if the county has to crowd 40 children into an algebra class, cut out trash pickup or snow plowing. The folks who live in the wealthier communities can afford to send their children to private school -- many already do -- or pay privately for services the county may not be able to provide.

The other conundrum is development. The 2 percent cap means that as new home or business construction occurs, the county will not realize enough tax revenue to provide the infrastructure to support it. Throw in inflationary pressures, population growth and a shift to growth areas, and the dilemma is even more grim. Amazingly, the tax rebels respond only by reciting "too much fat in government" over and over like a mantra.

. . . what's the alternative?

The mandate from the people has been heard; spending must be curtailed. But a vote against the 2 percent cap is not a vote for fiscal gluttony. The county has already approved a 4 percent assessment cap that applies only to residential property. It would offer substantial relief for homeowners without putting the county in a fiscal straitjacket. The 2 percent cap is a vacuous promise -- that taxes can be slashed and high-quality services retained. Disgruntled citizens who are offered such a happy proposition are understandably only too happy to accept it. But it is a lie; voters must summon the courage to reject it.

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