Candidates look in all directions to bail out city Future tied to federal, regional and state help.

June 17, 1991|By Michael A. Fletcher and Patrick Gilbert | Michael A. Fletcher and Patrick Gilbert,Evening Sun Staff

Bob Malloy, a northeast Baltimore liquor salesman, does not like the view as he scans the city from his middle-class perch.

He sees high taxes, high crime, inferior schools and spiraling auto insurance rates.

When he looks toward City Hall, Malloy sees a mayor he thinks is doing a decent job -- but to little avail. Malloy says Baltimore's problems are insurmountable: The schools are underfunded, the number of unemployed and unemployable residents is too large, and the city's other social problems are too deep.

In Baltimore County, things look much better to Malloy. The property tax rate is less than half the city's. Auto insurance rates are lower, and he perceives the schools and student achievement to be better than they are in the city.

"If the city government wants middle-class flight, they've got it," says Malloy, who plans to sell his house on Rosekemp Avenue, just east of Harford Road. "I've put a contract on a house in the county that is three times the size of this one, yet the property taxes are about the same and auto insurance is half the cost of what I'm paying now."

If Malloy, indeed, leaves Baltimore, he will join a march to the suburbs that has continued for some 30 years. In 1960, the city's population was 939,000, and by 1990 the figure had dropped to 736,000.

Not only has the city's population dwindled, but the exodus has stripped Baltimore of its financial independence. As the city's tax base has weakened, the demand for services has increased because the city's population is poorer. Meanwhile, federal aid to cities, including Baltimore, has been drastically reduced in the past decade.

The combination of a weak local tax base, an increasing number of poor residents and a withdrawal of federal support is a recipe for long-term financial disaster in the city. And fighting those trends will be perhaps the most important battle waged by the winner of this year's mayoral election.

It is a war many cities are losing. Philadelphia teetered on the brink of bankruptcy earlier this year. New York City is in the midst of a fiscal crisis that has prompted talk of draconian measures, including closing municipal pools and the Central Park Zoo and the dimming of one in four street lights. Bridgeport, Conn., is bankrupt.

So far, Baltimore has survived relatively unscathed. The city has retained its A-1 bond rating and it has managed to balance recent budgets through nuisance taxes and a relatively small number of layoffs rather than increases in property taxes.

Likewise, the $2.1 billion fiscal 1992 budget appears to be on the road to enactment. The budget holds the line on services, and its biggest casualty is a 6 percent wage increase for city workers.

While Baltimore's fiscal challenge is clear, how it will be met in the future remains murky.

Mayor Kurt L. Schmoke, who plans to announce his candidacy for re-election Sunday, has pushed to have the state step in to relieve some of the city's financial burden. Also, the mayor has worked to gradually reduce the city's work force.

In addition, Schmoke says the city must pursue a strategy of reducing its property tax rate -- which at $5.95 is more than twice any other in the state -- while not dramatically curtailing services. He says that is the best hope of holding on to what remains of Baltimore's tax-paying population.

The strategy has scored some successes. For example, the state has taken over the City Jail and the Community College of Baltimore and some costs for the Baltimore Zoo and the central branch of the Enoch Pratt Free Library.

But those moves have provided only temporary relief from the city's fiscal strain.

Schmoke says any long-term solution lies in a restructuring of state taxes. But a series of recommendations by a gubernatorial commission to raise taxes and distribute the new revenue to poor subdivisions such as Baltimore was pushed aside for summer study by the legislature during its past session.

"In the long run, we are going to need significant changes in the state tax structure or some kind of renewal of federal support for cities," Schmoke says.

His opponents in the Sept. 12 Democratic primary say, however, that the mayor has not done enough to put his ideas into action.

"One of the sources you can go to is the state," says Clarence H. Du Burns, the former mayor who lost to Schmoke in the 1987 Democratic primary. "What we need to do is fight hard to change the formula of reimbursement of income tax revenue to the city. But [Schmoke] doesn't know how to lobby state government. He doesn't speak to the governor, and that makes a difference."

William A. Swisher, a former state's attorney who is also running in the Democratic primary, says Schmoke should make deeper cuts in the city's 27,000-person work force.

"The only hope in the absence of a major increase in federal and state aid is to have a severe cost-cutting program," Swisher says. "The city government has to be downsized drastically."

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