Faced with new tax cap, Neall threatens layoffs ELECTION '92

November 05, 1992|By John A. Morris and John Rivera | John A. Morris and John Rivera,Staff Writers

County Executive Robert R. Neall, assessing the damage to his budget caused by a property tax cap passed by voters Tuesday, said yesterday he will have to lay off county workers to make up for the almost $15 million loss in revenue.

Despite the warnings of tax cap opponents prior to the referendum, Mr. Neall said that he will protect public safety programs, which include fire and police services.

But overall, he said, the size of county government will shrink.

"We were on our way to doing a lot of this stuff anyway. Now we are going to have to do it at a much quicker pace," said Mr. Neall, who was elected on a platform of fiscal conservatism two years ago.

The overwhelming 2-to-1 majority that the tax referendum garnered Tuesday from voters jittery over the economy and rising property taxes sounded a clear message, county officials said.

Voters embraced the tax cap in all 133 county precincts. Support was particularly heavy in St. Margaret's, Deale, Edgewater and Mayo -- waterfront areas among the hardest hit by rising property tax assessments. The tax limit passed in those areas by a 3-to-1 margin.

"Voters made a decision on how the business of the county is to be conducted, and now it's my job to carry that out," said Mr. Neall, who opposed the tax limit.

Council Chairman David Boschert agreed: "The voters say they want this. They have it. And we will address the issues as ordered."

Mr. Neall will make up for the shortfall by cutting "nice to do" but non-essential programs, spokeswoman Louise Hayman said. She declined to identify those services.

"We're looking at some permanent cuts. It's not just, 'Hold your breath and we'll get through this time,' " she said. "Public safety will feel it least, because we are already mean and lean in those areas."

One option Mr. Neall will not pursue is an increase in the state piggyback tax to offset the loss in revenue.

"When 70 percent of the people in the largest turnout in county history speak about capping taxes, I think it would be highly inappropriate" to increase the piggyback tax, Mr. Neall said. The tax stands at half the state income tax rate.

Increasing other taxes would not be wise, said Robert C. Schaeffer, president of the Anne Arundel Taxpayers Association, which spearheaded the tax cap.

"We've done it," he said of his group's efforts to get a tax cap passed. "Now Neall and the council can attempt to thwart it [by raising the piggyback tax], or they can start working with us on reducing the size of government, which is really what we've been after."

The county's tax cap will limit the increase in property tax revenue to 4.5 percent or the rate of inflation each year, whichever is less.

Anne Arundel was the only one of four counties with tax cap referendums on Tuesday's ballot to pass the measure.

Assuming the property tax rate of $2.46 per $100 of assessed value could remain constant next year, county budget officials say Anne Arundel may lose $15 million in revenue because of the tax cap and resultant decrease in the tax rate. The county stands to lose another $15 million if the General Assembly approves Gov. William Donald Schaefer's proposal to stop paying the cost of Social Security benefits for county teachers, librarians and community college employees.

County officials hope to avoid the cuts in services that Prince George's County saw after the Tax Reform Initiative by Marylanders was passed there in 1978, freezing all property tax revenue at the level collected by the county that year. The result was that teachers were laid off, class sizes grew and police and fire response times increased to levels considered unacceptable national standards. The measure was repealed by referendum in 1984.

County labor organizers, who fought the tax limit, were disappointed by Tuesday's vote. They predicted the lost revenue will result in more crowded classrooms and delays for police and fire units responding to emergencies.

"It's kind of ironic when we talk about buying a world-class education system and we can't even get the basics," said Kathleen Lyons, communications director for the Maryland State Teachers Association, which pumped over $200,000 into efforts to defeat tax cap initiatives throughout the state. "People talk a lot about education, but when it comes down to it, they aren't willing to pay."

Marvin Redding, president of AFSCME Local 582, said he believes voters misunderstood the referendum.

"There was a large turnout by people who thought they could save money, but they didn't really understand what it could do down the road," Mr. Redding said. "It's going to be a hardship for the employees of Anne Arundel County. It's going to affect us in a very negative way."

"Certainly, we're disappointed it passed this year," said Jeanette Wessel, executive vice president of the Anne Arundel Trade Council, a business group that opposed the cap. "We're hoping that our county executive, with his fiscal skills, can work some magic. That may be what it takes."

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