100 Percent Bad Idea

Marshall H. Pinnix

October 28, 1990|By Marshall H. Pinnix

WOULD YOU LIKE to call the police and have a 30-minut response time? A business acquaintance in New York recently spotted his stolen car parked at the curb in midtown Manhattan and called 911; thirty minutes later the cops arrived -- after the thieves had pulled off.

Government services in Baltimore County -- both emergency and everyday services now taken for granted -- could fast deteriorate to that level, or worse, if the 2 percent cap on increases of property-tax revenues should win in next week's voting. Anyone inclined to vote in favor of the cap should ask (and answer) several questions:

* Have I held my own expenditures to a 2 percent increase over the last year (assuming no substantial change in financial responsibilities)? Anyone who can honestly answer yes may vote for the 2 percent cap in good conscience; anyone else who votes for it can reasonably be considered a hypocrite.

* How does my Baltimore county property-tax bill compare to other taxes I pay? This year's property tax for my wife and me was just 45 percent of Social Security taxes withheld from my pay. Good though the Social Security system may be for one's retired parents and one's own retirement some day, most people see little benefit from it during their working lives. By contrast, all citizens of the county enjoy police and fire protection, emergency medical services, public schools, roads and highways, libraries and numerous other essential services.

* What expenditures should be cut to stay within the confines of the 2 percent cap? Total expenditures in the current fiscal year are to increase by 3.9 percent (from $816 million to $848 million), or some two percentage points below the current rate of inflation. Revenues from the property tax are to increase by 5.9 percent (from $342 million to $362 million), about the rate of inflation over the last year.

If the 2 percent cap on the increase of property-tax revenues had been in effect for this fiscal year, those revenues could increase only to $349 million -- 2 percent above the $342 million of last year and $13 million below their budgeted level this year. So where to cut?

From debt service (interest and repayment on county bonds already outstanding)? That figure is to increase by 17.1 percent (from $51 million to $59 million). This is by far the largest percentage increase of any category of expenditures, but it is fixed and cannot be reduced.

From education? That is to increase in the current year by just 4.2 percent (from $336 million to $350 million) -- which represents just 2.3 percent per pupil? Applying the $13 million here would reduce the $350 million to $337 million -- virtually no overall increase from the prior year, and a decrease on a per-pupil basis.

From police protection? That is to increase by 3.5 percent (from $69 million to $72 million). Applying the $13 million cut here would reduce the $72 million to $59 million -- 16 percent less than the prior year. Is anyone for less police protection?

The same dilemma is arrived at for fire protection, public works, libraries and many other categories. No major category is set to increase by more than 4.9 percent this year.

How about finding additional revenues from sources other than the property tax? The second-largest source is the 50 percent piggyback add-on to the Maryland income tax. No luck there: Baltimore county is already at the maximum piggyback rate. Other state-shared taxes and grants combined make up only 10 percent of total revenues. We can just see legislators from the rural Maryland counties bailing out the city slickers from Baltimore county.

We hear about government waste from the tax-cap advocates. No doubt, as in every human activity, there is some waste (are these advocates themselves 100 percent frugal?). But when the county is holding total spending a percentage point or two below general inflation, it is already gnawing at the waste. Let's not starve essential services as well. Vote against Question T, the 2 percent limitation on property-tax revenue growth.

Mr. Pinnix is a financial analyst for a brokerage firm.

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