A simmering two-year dispute between the federal government and Baltimore over the way payroll records are kept is threatening the jobs of 360 city employees.
The U.S. Department of Housing and Urban Development, charging that the city has failed to keep adequate records for $7 million-$8 million in block grant funds it uses to pay city workers, has ordered City Hall to immediately stop paying salaries with the money.
If the order sticks, 360 city employees -- among them day-care center attendants, rat-eradication specialists, housing assistance workers and mayor's station employees -- will have to be laid off, according to city officials.
But Mayor Kurt L. Schmoke, who called the HUD freeze "ridiculous" and said it could have a "devastating and irreversible" impact, asked a federal court in Baltimore yesterday to block the HUD action. Judge Walter E. Black Jr. is expected to schedule a hearing on the request, perhaps as early as this week.
"What they are asking us to do is what no other city has been asked to do," Mr. Schmoke said.
The HUD bombshell exploded as the city was already reeling from news that the state was planning to slash aid to Baltimore by as much as $20 million, part of Gov. William Donald Schaefer's effort to balance the state budget.
The HUD action would freeze roughly one-third of the $24 million in community development block grant funds the city is scheduled to receive this year.
The HUD office in Baltimore ordered the salary freeze in a Sept. 30 letter to the Baltimore Housing and Community Development commissioner, Robert W. Hearn. The letter said the city had failed to develop payroll-reporting methods that would ensure that the federal government was being billed only for work covered by the block grant guidelines, and not for work that the city should finance.
Joseph J. O'Connor, the local HUD administrator, said the federal government first warned the city more than two years ago that its record-keeping methods were unacceptable. "They have been notified of it over and over again," he said.
The records in question are those the city submits to HUD showing block grant money spent for salaries of city employees working on projects financed by the grants. Mr. O'Connor said two city agencies -- the Urban Services Commission and the Department of Housing and Community Development -- had failed to meet the rules.
"We don't believe it would take very long to make the changes that need to be made," Mr. O'Connor said. "How long they will take them to do it, I can't answer."
The city has said that it has been trying to comply, but that the rules have been unclear and HUD has been changing them.
Mr. Schmoke said that city housing officials have been trying to reach an agreement with HUD since June, but that federal officials are demanding a higher standard for city payroll records than are HUD offices in other cities.
The mayor said that the city already has gone a long way toward satisfying that requirement, however, and that stricter reporting guidelines would force city workers to spend more time explaining what they were doing with their days and less time doing the work.