Mayor says he'll consider more budget, service cuts

January 31, 1991|By Martin C. Evans

Mayor Kurt L. Schmoke is offering to consider further reductions and the possible elimination of some city services to persuade state lawmakers that additional state aid to Baltimore would be money well spent.

The offer was contained in a "Preliminary Strategic Financial Plan," drafted by the city Finance Department, which depicts the LTC city as at the brink of financial disaster.

"The simple truth is that the existing revenue base is inadequate to fund essential city services without a virtual shutdown of the rest of government," says the report, which aides to the mayor have been circulating among key state legislators in Annapolis.

Part of the mayor's intent in circulating the plan is to assure the General Assembly that he is willing to do everything in his power to maximize scant resources.

As a result, he says he is prepared to consider cuts in services. But, his plan also calls for using a portion of the future growth in city tax revenues to reduce the property tax rate -- which he considers necessary to retain the middle-class taxpayers -- and to build a "rainy day" fund that would make requests for emergency assistance from the General Assembly less likely.

Still, the plan makes it clear that the mayor believes more state aid is essential now if the city is to have any chance of balancing its budget without again resorting to massive layoffs or Draconian service reductions. For example, the plan notes that rising school costs alone would consume the entire projected revenue growth for the city next year, leaving nothing additional for other services.

Although the plan indicates hard choices must be made about which services to eliminate, the mayor said yesterday that he is not yet ready to make those choices.

"I view [the report] as flexible guidelines," Mayor Schmoke said. "Actual budgeting decisions will depend on the revenue picture this spring, and that depends on what happens during this legislative session."

The plan, which the mayor intends to follow as he prepares the budget this spring, is accompanied by a report that says rapidly escalating expenses and stagnant revenue growth will press the city to the wall unless the state intervenes with more state aid.

The plan appears to be an attempt by the Schmoke administration to rally political support in Annapolis for passage of tax restructuring measures recommended by the gubernatorial Linowes commission. If passed by the General Assembly, those measures would raise $800 million, largely to benefit poorer subdivisions such as Baltimore.

The plan, which city budget officials said will help convince state legislators that the mayor is serious about solving Baltimore's chronic fiscal problems, calls for a review of city agencies and departments to determine whether they can be reduced or eliminated to save money.

The plan also calls for using 15 percent of the growth in city tax revenues -- or about $2.7 million based on projections for next year -- to reduce the property tax rate and to build the "rainy day" surplus.

"It is a document that can clearly demonstrate the city has a need for additional revenue sources," said William R. Brown Jr., the city finance director.

But the document -- like the mayor -- does not address which services might be sacrificed.

Deciding which recreation center or fire station to close or which health program to eliminate could have explosive political implications as the mayor and members of the City Council prepare to run for re-election in the September primary.

The city must provide for a disproportionately large portion of Maryland's intractable social problems, such as poverty, drug abuse, AIDS and homelessness.

At the same time, it is losing badly needed revenue sources as the flight of much of the city's middle class to the suburbs has cost Baltimore dearly in lost property and income tax revenues.

The twin plagues of high expenditures and slow revenue growth threaten the city with budget deficits extending for at least the next four years, Mr. Brown said.

He said the deficit is projected at $54.1 million for fiscal year 1992, which begins July 1, $21 million for 1993 and $17 million in 1994.

But the city by law must eliminate the gap before the budget year begins.

Last year, the city closed the gap by firing about 90 workers and encouraging hundreds of others to leave voluntarily.

Members of Baltimore's business community, which has thrown its support behind the recommendations of the Linowes commission, were delighted by the plan to aggressively manage future resources.

James T. Brady, managing partner of Arthur Andersen & Co. and a member of the Greater Baltimore Committee, said the proposed financial plan suggests that "cities, Baltimore included, cannot behave financially in the same way they have in the past."

"That's a very powerful message to send out to the legislature and the business community. . . ," said Mr. Brady.

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