Lodging tax plan is first shot fired in budget battle

December 09, 1990|By James M. Coram | James M. Coram,Staff writer

County budget administrator Ray Wacks asked the county's Annapolis dele-gation Wednesday for help in getting a bill passed that would allow the county to charge a 5 percent tax on overnight accommodations.

The tax would add $900,000 to the county's dwindling revenues, Wacks said, yet keep the county's motels and hotels competitive with other Jurisdictions.

Most of the income derived from the tax would go to the county's general fund, but a portion would be used to "dramatically increase" the $60,000 a year the county spends on tourism, Wacks said. No decision has been made yet on how great the increase would be, Wacks said, but a source in the council office estimated it would be about $40,000.

Unless the county is allowed to levy the tax, there is no guarantee that the $60,000 now budgeted for tourism could continue given the county's "current economic situation," Wacks said.

County Council Chairman C. Vernon Gray, saying he was speaking merely as a member of the council and not on behalf of it, called the proposal "the wrong tax at the wrong time."

Gray said that occupancy rates are already low in the county and that such a tax, if levied, would "stifle and depress" the industry even further.

Gray also disagreed with Wacks' contention that the tax would apply only to transients.

"The occupancy rate is even worse on weekends," he said. Innkeepers would be urging local people to fill those weekend vacancies, Gray said.

The delegation asked Gray to poll the council on the proposal and report back his findings.

When the administration of former County Executive M. Elizabeth ilobo made the same request two years ago, the delegation turned it down, fearing it would restrain competition in the Route 1 corridor -- a fear Gray restated Wednesday night.

Wacks said the county could impose the tax and still have the lowest, rate tn the Baltimore-Washington corridor. Montgomery County already has a 5 percent accommodations tax.

"Very few Howard County hotels or motels are in direct competition with hotels or motels in Montgomery County," Wacks said.

Every other adjacent jurisdiction except Carroll County has a hotel tax, Wacks said. Prince George's County has the highest hotel tax, 10 percent, Wacks said, followed by Baltimore County, 8 percent; Baltimore City, 7 percent; and Anne Arundel County, 6 percent.

Citizens will have an opportunity Thursday night to tell new Executive Charles I. Ecker what they think of the idea when he conducts a public hearing to gather information about what various citizens and citizens groups want or don't want in next year's budget.

One of the questions facing Ecker is how he can hold the line, much less expand programs and services, without increasing property taxes.

Shortly after his election. Eeker had predicted the shortfall for the fiscal year budget ending June 30 would be $18 million. Next year's shortfall would be about $25 million, he added, 'probably" requiring an increase in property taxes. Ecker has said he hopes to keep that increase under a quarter.

As for this year's budget, Ecker has said he hopes to avoid laying off or furloughing employees and has asked for the cooperation of every branch of government, including the school system, to help cut expenses as much as 10 percent. School expenditures amount to more than 50 percent of the budget.

One of the problems facing Ecker for next year is that the teachers union has already negotiated a 6 percent pay raise with the school system. Ecker, on the other hand, has yet to negotiate with any of the four county unions.

County contracts with the police, fire, corrections and blue-collar unions expire this year. Those unions often follow the lead of the teachers when seeking pay increases.

In addition to negotiating with the unions, the executive will have to make room in next year's budget for the new Savage branch library and health center. That means increased costs for the heating and cooling of the combination center, as well as money for center employees, books and supplies.

Two committees vital to the budget process have yet to give Ecker a report. The spending affordability committee which recommends a ceiling for the operating budget, has met only once so far, and the bond affordability committee, which recommends a ceiling for the capital budget, has not met at all.

Meanwhile, department heads are preparing to submit readjusted projections to Ecker by the end of next month.

Ecker will submit each department's capital budget request to the Planning Board on Feb. 1. That panel makes sure they are in keeping with the county's General Plan.

In March, Ecker will conduct a second public hearing on the budget. He must submit his capital budget to the council for consideration and approval by April 1 and his operating budget no later than April 20.

With the exception of the education portion of the budget, the council can only cut or approve what Ecker has sent it. It can restore cuts the executive has made in the education portion of the budget.

The council must approve the entire budget and set the new Property tax rate by the end of May. The current rate is $2.45 per $100 of assessed value.

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