The Piggyback Trap

DANIEL BERGER

May 23, 1992|By DANIEL BERGER

So now everyone is arguing about the federal responsibilitiesthat led to the Los Angeles riot and the programs Washington ought to institute. Only last month, the fashionable thing to believe was that any urban problem out there is not the nation's responsibility but California's.

If that is so, the cures to whatever may ail Baltimore are to be found not in D.C. but in Annapolis.

So it is interesting that the legislative session this year did not address those problems. The challenge was to raise taxes just enough to maintain services and employment, to get state government through this recession year. Aid to the city, as always, was by sleight of hand.

Which gets us to the grand compromise of the session, the optional increase of piggyback income tax for subdivisions, from 50 to 60 percent.

That can be represented as a 20 percent increase in the piggyback tax itself. Raising the combined state and local taxation (on the top-rated portion of income) from 7.5 percent to 8 percent would be a 6.7 percent increase in that combined rate. It would be an additional half-percent of the top portion of income that went to taxes.

And it is a terrible trap for the poorer subdivisions. Imposing the maximum increase would bring the most extra income to the county where the highest proportion of people are employed and at the highest average wage. It would bring in the least where the smallest percentage are employed, and at the lowest average wage.

If all subdivisions imposed the maximum increase, Montgomery County would gain more revenue than Prince George's and Baltimore County more than Baltimore City. This would not decrease the revenue gap between poor and rich subdivisions, but widen that gap.

All subdivisions are facing revenue shortfalls and painful decisions this year. A recession treats all broadly alike.

Anne Arundel County Executive Robert R. Neall encouraged passage of the piggyback increase authorization, but plans not to use it. Howard County Council this week voted against raising the piggyback from 50 to 52 percent, a 4 percent increase in that tax.

Baltimore County Executive Roger B. Hayden, the reformed low-taxer, was the first local leader to propose increasing the piggyback. He wants to raise it from 50 to 55 percent, a 10 percent increase in the piggyback rate.

Now look at the predicament of the city. Its property-tax rate is roughly double that of everywhere else. If on top of that it raised piggyback taxes more than neighbors did, it would discourage tax-paying wage-earners from moving in, and provoke some to leave.

But if the city does not raise its piggyback rate, it might sacrifice sympathies of legislators. They could say that Baltimore did not help itself.

In this predicament, Mayor Schmoke first said that the city could not raise the piggyback unless Baltimore County did. After Mr. Hayden proposed doing so, Mr. Schmoke suggested matching the county increase to meet the Pratt Library budget request, which would not have required it. He was using public support for the Pratt to justify a tax increase for other purposes. Later, he backed away from that, and might leave Baltimore County imposing a tax increase that the city did not match.

Whether the city carries through with its threat to sue the state again for more equal funding for education, the question is reopened. The General Assembly has settled nothing and gotten nothing off its back.

Everything will have to be revisited. But while the new piggyback provision lasts, the city and Anne Arundel, Baltimore, Carroll, Harford and Howard counties ought to see it for the trap to them individually -- and the challenge to their metropolitanism -- that it is.

Instead of looking nervously over their shoulders at each other, they ought to collude openly.

The vehicle for such collusion, the Baltimore Regional Council of Governments, has been down-sized and will be reborn July 1 as the Baltimore Metropolitan Council. It is too late to act un-chaotically this year, but the six subdivisions ought to use the Metropolitan Council next budget year to thrash out a common piggyback tax rate.

Subdivision borders are false barriers that do not reflect the way people of the Baltimore region live.

An archetypal upper-middle-class Baltimore couple lives in one subdivision, works in two others, shops in a fourth and patronizes schools in a fifth. Even at lower income levels, enormous numbers of people live their lives in at least two and often three subdivisions.

This is one metropolitan area. It cannot have a common property tax rate. The least it should achieve is a common piggyback tax rate.

Daniel Berger writes editorials for The Sun.

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