City says it faces cuts, shortages without state aid

January 30, 1991|By Michael A. Fletcher | Michael A. Fletcher,Evening Sun Staff

Baltimore will be unable to balance upcoming budgets without developing new revenue sources or making deep cuts in government services, according to a financial plan just completed by city officials.

The "strategic financial plan" paints a picture of a city in steep economic decline and with limited ability to increase revenues with its property and income taxes.

"The simple truth is that the existing revenue base is inadequate to fund essential city services without a virtual shutdown of the rest of the government," the report says.

While it is beset by money problems, the city also is facing demands for new services caused by a continuing spiral of social problems, including high rates of teen-age pregnancy, an escalating school dropout problem and increasing crime, the report says.

Further squeezing the city is the continued flight of the middle class, who for the past three decades has been leaving Baltimore for the suburbs in search of lower taxes, lower insurance costs, better schools and safer neighborhoods.

Consequently, even as Baltimore faces financial hard times, it must try to lower its property tax rate to hold on to its remaining middle-class population, the report says.

The plan is a comprehensive review of city finances that is envisioned as a guide for making future cuts in city services and a tool to lobby for increased help from the General Assembly, Mayor Kurt L. Schmoke has said.

The report was being circulated among legislative leaders and members of the city's legislative delegation Monday and yesterday.

The document offers a summary of the city's efforts to improve its finances and is viewed as a key element in the city's strong support of the Linowes commission recommendations. The gubernatorial commission has recommended raising $800 million in new taxes largely to help poor subdivisions like Baltimore.

"I think that it's important that legislators realize that the city through its mayor is practicing self-help," Senate President Thomas V. Mike Miller Jr. said yesterday. "The city of Baltimore is not waiting for resources to start flowing across the city line before it takes some action."

The report says the city will face a series of budget shortages in the coming years, beginning with a $54.1 million deficit in making the budget that will go into effect next July.

And, unlike the money problems that have complicated city budget planning for at least the past decade, the upcoming shortages will result in massive layoffs and unprecedented service reductions if the city doesn't receive major help, the plan warns.

For instance, the expected $18 million increase in the city's contribution to education will wipe out all of the city's expected revenue growth next fiscal year. Further illustrating the problem, the increase in the school budget would fund no new initiatives and is only enough to maintain current levels of service.

The rest of the city budget will have to be balanced by increases in state aid and service reductions, the report says.

"Without additional state assistance, the city faces the choice of massive disruptions to all areas, continued current service levels in essential areas and the complete elimination of non-essential areas," the report says.

The report adds that the other choice -- tax increases -- is unthinkable, because Baltimore already is burdened by high tax rates.

The city's budget problems are being worsened by soaring employee costs, which include pay raises necessary to keep and attract qualified workers and spiraling fringe benefit costs, the report says.

Those costs are going up despite a cut of nearly 1,500 jobs from the city payroll in the past three years.

The job reductions have come partially as a result of a city hiring freeze in place since 1988, the report says. The only positions being routinely filled by the city are in education and public safety jobs.

To weather the upcoming budget problems, the plan says that the city should continue to reduce its 29,000-employee work force and re-evaluate the services that it offers.

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