Budget blues: III

April 22, 1991

Kurt Schmoke is desperately trying to hold the line. His proposed $2 billion budget is austere -- nonetheless, there will, at least, be no layoffs and no significant cuts in service. More than that, Schmoke has managed to funnel an additional $22.1 million to the schools, much of it for disadvantaged students -- an infusion that is sorely needed.

The mayor performed this budget balancing act in part by cutting 211 unfilled positions and by persuading unions to withhold negotiated pay increases. But he couldn't have pulled it off without state help. Although the legislature punted on the Linowes fiscal rescue plan, the state's decision to take over the City Jail gets 850 employees off the city payroll July 1. That, along with $10 million in special aid from the General Assembly, will get the city over the top -- but barely, and only for the time being.

Recession aside, Baltimore's fiscal difficulties will grow as competition for economic development heats up in the region and the middle class trickles out of the city, a chief reason the tax base has now shrunk to the point that the city no longer can support its own services. Schmoke's budget exacerbates these problems by leaving intact the city's exorbitant property tax rate. As such, without council action to increase revenue in the long term, the mayor's spending plan is little more than a Band-Aid.

Council members face tough choices, the first of which is a vote on whether to wipe out the container tax. The fee brings in close to $7 million a year, which Schmoke has included in his budget. If council ends the tax, the city must replace that revenue. But the landfill fees council is considering as a substitute may come up $2 million short. Even if the $2 million hole could be patched with nuisance fees, however, the city would merely be treading water. That might be enough in an election year, were it not for an increasingly powerful taxpayers' coalition pushing for a big cut in the property tax rate.

Certainly, a reduction is critical if the city is again to become a magnet for the middle-class, whose tax dollars can revitalize it. But taking the long view also takes courage. For starters, retaining the bottle tax and implementing a landfill tax might be ,, necessary to offer meaningful tax relief and hold the line on services. Additional fees and cuts in non-essential services might be required too. Schmoke's budget is merely the opening gambit, and the stakes are high. The coming months will test the council's mettle.

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