Budgets lean in city, Baltimore, Howard counties Mayor keeps $5.95 property tax rate

April 17, 1991|By Martin C. Evans

BALTIMORE — The administration of Mayor Kurt L. Schmoke unveiled a proposed $1.787 billion operating budget yesterday for the next fiscal year that provides for no reduction in property taxes but is also likely to avert layoffs of city workers during an election year.

"This is a very difficult budget," said city budget chief Edward J. Gallagher. "We have abolished a lot of positions over the years, so we are getting extremely thin."

The proposed budget would increase spending by only 1.8 percent.

Mr. Gallagher said that close to $10 million in special aid from the General Assembly plus a virtual freeze on city employee wage in

creases allowed officials to balance the budget without resorting to layoffs or significant cuts in services.

But the proposed budget -- which today goes to the Board of Estimates -- provides no reduction in the city property tax rate of $5.95 per $100 of assessed value -- by far the highest in the area. The lack of a property tax rate cut in an election year is unlikely to sit well with members of the City Council, who have been talking of trying to make at least a symbolic cut this year.

"There is a strong sentiment in the council to cut taxes," said Council President Mary Pat Clarke, who is a member of the Board of Estimates.

David Rudow, head of the Baltimore City Homeowners Coalition for Fair Property Taxes, said that even though Mr. Schmoke told him last year that he would try to cut the property tax by 10 cents, he was not surprised that the proposed budget does not call for a cut.

"Having not won the battle on square one, we'll go to square two and hope the City Council will act quickly on cutting taxes," Mr. Rudow said. "We are going to keep chasing people out of the city if we don't cut taxes and improve our schools."

Mr. Gallagher said that even though this year's budget is relatively austere, the city's growing fiscal difficulties and shrinking tax base will make future budget decisions even tougher.

"Next year we are going to be in the same position we are in this year," Mr. Gallagher said. "We are going to have to decide that some services are going to have to be reduced or eliminated."

The budget would cut 211 positions from the city payroll, bringing the number of city employees to 26,602. But Mr. Gallagher said that will involve eliminating mostly unfilled positions, and that retirements and normal turnover should eliminate the need for layoffs.

An additional 850 employees of the City Jail will leave the city payroll when the state takes over operation of the jail July 1.

Mr. Gallagher said the mayor's success earlier this year in persuading the municipal unions to allow the city to withhold negotiated pay increases scheduled to go into effect July 1 -- which saved $38.1 million -- was key to balancing the city budget. For example, without the wage freeze, the city would have had to pump an additional $17 million in general funds into the school budget just to cover teacher salary increases.

Mr. Gallagher said that although the budget does not offer any sweeping initiatives, it holds the line on services.

School spending will increase by $22.1 million -- an increase of about 5.4 percent. Much of that extra money is to be targeted at disadvantaged students through the federal program known as Chapter I.

City budget officials were forced to grapple with disappointingly slow growth in receipts from property, motor vehicle and other taxes, which have been hit hard by slack auto sales, a decline in the real estate market and a drop in consumer spending.

"This is the smallest real growth I have seen, and I've been here since 1983," Mr. Gallagher said, referring to disappointing property and transfer tax receipts.

Budget officials were further challenged by the absence of a surplus in the current city budget, which ends June 30. In the past, city budget officials have been able to use surplus money from the prior year to balance an upcoming budget.

The budget anticipates $6.9 million in revenues from the city's tax on beverage containers, a tax that the City Council moved a step closer to eliminating two days ago when it voted preliminary approval to a plan to end the tax on May 31. A final vote on the tax repeal could come as soon as Monday.

Although council leaders have promised to replace the lost bottle-tax revenues by increasing the fee charged to trash haulers who use city incinerators and landfills, Schmoke administration officials have said the fee increase might generate only $4.8 million per year, leaving the city with a $2.1 million shortfall.

Although sentiment in the council for a cut in the property tax rate may be strong, it is by no means unanimous.

Some council members said that it might not be wise to cut taxes now, only a few weeks before the General Assembly is to take up the question of whether and how to provide more aid to Maryland's poorer subdivisions, including Baltimore.

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