cut in city tax rate City budget is balanced by sleight-of-hand.

June 25, 1991|By Patrick Gilbert | Patrick Gilbert,Evening Sun Staff

Baltimore City Council members have smoothed the way for this summer's municipal election campaign with budget sweeteners for taxpayers, city employees and labor unions.

The council even included a $5.2 million budget surplus, but the bulk of that -- $3.8 million -- may be needed to give firefighters and fire officers pay increases won in an arbitration that a Circuit Court judge said yesterday is binding on the city.

In two back-to-back meetings that lasted from noon until 7 p.m. yesterday, the council:

*Reduced the property tax rate by 5 cents, to $5.90 for each $100 of assessed value. Residential property owners have been lobbying hard for significant property tax relief.

*Gave final approval to supplemental appropriations for 50 additional police foot patrolmen and 18 housing inspectors, popular measures with virtually all segments of the community.

*Adopted changes in two major city employee pension plans that will increase retirement benefits.

*Approved legislation requiring the city to purchase vehicles made in America, a major issue with labor unions that can provide campaign money and workers.

The council also gave final approval to a $2.05 billion budget for fiscal year 1992.

To reduce taxes and increase services in a tight budget year, the council engaged in some fiscal sleight-of-hand.

To accomplish a tax reduction, the council needed to cut the budget by $3.9 million. To hire additional police and housing inspectors, it had to find an additional $1.9 million.

First, the council cut $3.9 million in miscellaneous personnel costs. But the plan is to restore these cuts through supplemental appropriations during the coming fiscal year. This technically meets the city's requirement for a balanced budget.

To restore the budget cuts and hire the additional police and housing inspectors, the council last week approved legislation imposing a$7.50-per-ton surcharge on the tipping fee that commercial haulers pay at the city's landfill and incinerators. This is expected to generate $2.7 million annually in new revenue.

The council also got $3.1 million from the Employee Retirement System, mostly from surplus funds generated by investments with higher-than-expected yields.

The council also gave final approval yesterday to legislation that would increase pension benefits in both the ERS and the Fire and Police Retirement System.

By increasing from 8 percent to 8.5 percent the anticipated earning rate of both funds, the city got to reduce its contribution to both funds. The savings are then plowed back into the retirement system to increase pension benefits.

In the case of the fire and police plan, the city already had budgeted its contribution for the coming fiscal year. The change in the law means a one-time saving of $5.2 million.

City Finance Director William R. Brown Jr. said the money could still be put into the fire and police pension or could be kept for an emergency.

That emergency might come sooner than expected. The city may have to use at least $3.8 million of the $5.2 million to pay wage increases to its 1,850 firefighters and officers.

In March, Mayor Kurt L. Schmoke froze negotiated wage increases for all city employees to save about $39 million in fiscal 1992 and avoid layoffs. But the two fire unions contested the freeze in court.

Yesterday, Baltimore Circuit Court Judge Kathleen O'Ferrall Friedman ruled that the city could not freeze wage increases for city firefighters and fire officers.

The unions' contract, with its 6 percent wage increase, was awardedthrough binding arbitration in 1990. Therefore, union leaders contended, the city could not violate the arbitration award by freezing the wage increase.

The judge upheld the unions' position yesterday. She also rejected the city's argument that the binding-arbitration provision, which allows either the city or the fire unions to request arbitration to settle contract impasses, was unconstitutional.

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