Tax Cap's Failure Gives Neall Some Room

November 08, 1990|By Samuel Goldreich | Samuel Goldreich,Staff writer

County Executive-elect Robert R. Neall has one less pain in the neck to worry about.

Although still plagued by a bruised spinal chord from a summer auto accident, he will take office next month without the fiscal handicap of a cap on county property tax revenues.

Neall remains convinced that tough times and a recession loom ahead, but he said yesterday that citizens' repudiation of a proposed charter amendment limiting tax collections makes the challenge of managing the county's finances a lot easier.

First, the county can probably maintain larger budget surpluses than he predicted throughout his campaign.

"I think we've got some flexibility now, which is the reason why I opposed the tax cap," he said.

Neall built the central message of his campaign around Question D, a proposed charter amendment to restrict growth in property tax revenue to 4.5 percent or the rate of inflation, whichever is lower.

While opposing the cap, he contended that voluntarily restricting spending to less than what taxpayers can afford was the best answer to rising tax bills.

Apparently, most voters believed Neall, because they elected him narrowly and rejected Question D by a margin of 59,081 votes to 49,365.

With that vote -- a surprise to many observers -- Neall backed away slightly from one of his few specific budget-cutting promises.

Assuming that Question D was going to pass, he had stated a goal of keeping the county's planned surpluses to 5 percent of the operating budget (currently $617 million). Modest annual surpluses have been designed as an emergency "savings account" to limit the risk to county bondholders in the event of a budget crisis.

With a recession and a tax cap, Neall warned that the county could ill-afford the double-digit surpluses the Lighthizer administration has spent over much of the past eight years on capital projects. Opposing such pay-as-you-go financing has been a major rallying cry for tax-cutters and Republican candidates.

But the county can expect to keep $1.5 million to $8 million that would have been lost to the tax cap, depending on which interpretation of the measure was valid. Keeping that in mind, Neall said, a 7 percent to 8 percent surplus might be advisable.

Meanwhile, tax-cap supporters were disappointed yesterday by their come-from-ahead loss at the polls.

"We were fighting very powerful interests all the way," said Mac Greeley, spokesman for Anne Arundel Taxpayers for Responsive Government, the group that put Question D on the ballot. "The county, the teachers union -- we were fighting a lot of money."

Early opinion surveys showed that the measure and a more restrictive proposal on the Baltimore County ballot were supported by 2-to-1 margins.

Those numbers held through September and most of last month, despite a series of debates and intense opposition from local officials, many candidates, environmentalists and organized civic groups.

But a $200,000 television and radio advertising campaign and mailings by the Maryland State Teachers Association made emotional warnings that education, police and fire and ambulance protection could falter if the ballot measures passed.

The measure originally seemed to promise hundreds of dollars in tax relief to the average homeowner, but its potential effect was reduced in September, when the state Court of Appeals ruled unconstitutional a provision that would have rolled back revenue to 1989 levels.

The entire issue was thrown into confusion last month, when the county issued an informal legal opinion that would have made the cap nearly irrelevant both to individual tax bills and county coffers. Ongoing development would allow taxes to rise above the proscribed cap, the Office of Law said.

AATRG president Robert Schaeffer compounded the confusion when he first agreed with the county, then reversed himself and accused officials of deliberately muddying the debate.

"The crowning confusion was the language written by the Board of Elections," Greeley said.

But the spokesman took satisfaction in making tax relief a centerpiece of the 1990 elections and noted the success of Republicans at the polls.

Diane R. Evans, a GOP candidate who took the 5th District seat, said that her party's success will be the key to capping taxes.

"I felt if we don't elect council members who wanted to slow the rate of growth in spending, the liberal members would find ways to continue spending," she said Tuesday night.

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