Proposed tax increase for city gets cold shoulder

November 24, 1992|By William F. Zorzi Jr. | William F. Zorzi Jr.,State comptroller's officeStaff Writer

If the Baltimore City Council's reaction last night to Mayor Kurt L. Schmoke's proposal for increasing local income tax is an indication of its chances of survival, the plan may be dead.

Immediately after the bill to raise the so-called piggyback income tax rate for city residents to 55 percent from 50 percent was introduced, council members began to raise their objections.

"We have enough disincentives in this city," said Councilman Perry Sfikas, D-1st. "To ask for an income tax increase is absolutely ridiculous."

Six other council members publicly echoed his objections -- though not as strenuously, -- and still others turned thumbs down privately.

Council President Mary Pat Clarke, who maintained she had not made up her mind about the issue, said Mr. Schmoke at this point did not have the votes on the council to approve the tax bill and predicted an uphill battle on the proposal.

The display reached the point where Councilwoman Rochelle "Rikki" Spector, D-5th, wryly asked Mrs. Clarke if the council was holding a hearing -- or merely introducing a bill.

The council objections from the floor occasionally took the form of recommendations that ranged from trimming the budgets of city agencies further to ending a contract for paying 85 percent of the operating costs of the private Pulaski Highway incinerator.

Mr. Schmoke's plan would raise an estimated $10.2 million in revenue for the cash-poor city, which is reeling from cuts of $33.6 million in state aid since July 1.

Calculating what that $10.2 million would mean to the paychecks of individual city residents is impossible because income tax is figured on a taxpayer's net income, and everyone's is different based on the number of deductions and other factors. Finance officials, using figures for the average income tax revenue received from taxpayers in 1991, estimated the average increase for city residents' withholding would be about $37 a year under the plan.

Some council members privately went so far as to speculate that Mr. Schmoke was proposing the unpopular plan to counter suggestions by the Maryland General Assembly and Gov. William Donald Schaefer that the city is not doing as much as it could to hold down costs and raise revenue.

Peter N. Marudas, Mr. Schmoke's legislative liaison, said the city's need to respond to the budget crisis was "urgent."

"We never expected the these unprecedented cuts -- the eighth in two years," Mr. Marudas said. "We need to present our case."

In a form letter to council members sent Saturday, the mayor pledged to hire 230 more police officers and improve fire department staffing with the additional money.

But Mrs. Clark expressed concerns that the administration's figures keep changing.

"This council needs these numbers to stand still before it can even look at the proposal," she said.

After the meeting, the council president said she was told Friday by administration officials that $4.2 million of the revenue would pay for 240 new police officers and another $2 million would be used for additional Fire Department staffing.

But by last night, she said, finance officials had changed those estimates, telling her that $4.2 million would be used to hire 120 new police officers this year and another 120 next year. She also said she was told that the fire department costs would be about $7 million, "but that they'd try and hold it to $5 million."

"So suddenly, a $6.2 million public safety package has grown to $10 million," Mrs. Clarke said. "When you see that signal, you know you're walking on quicksand. . . . That's my concern: we can't even get to the issue, because the numbers won't stand still."

"I think I speak for a lot of members when I say we don't feel that we've squeezed out all the waste and ensured all the efficiencies" in city government, said Councilman Anthony J. Ambridge, D-2nd.

Mr. Ambridge said said he would oppose the increase, unless his constituents tell him otherwise.

"We're taxing ourselves out of business here," he said. "It's going to be a hard sell."

Councilman John L. Cain, D-1st, said he agreed that more money is needed for police and fire protection, but he is opposed to the tax increase.

Mr. Cain, instead, proposed saving the city an estimated $10 million to $15 million a year by breaking a 1981 contract with the Pulaski Co., owner-operator of the Pulaski Highway incinerator. The contract, which runs at least until 1996, requires the city to pay 85 percent of the company's operating costs, though it only supplies 20 percent of the refuse to the facility.

That arrangement -- criticized widely at the time as a "sweetheart deal" -- was struck by then-Mayor Schaefer and his friend and political backer, Willard Hackerman, the construction magnate who is majority owner of Pulaski Co.

"It just so happens that this increase and the contract are almost a wash," Mr. Cain said. "That money could be diverted to the police and fire departments and still leave us more money for recreation and parks, and libraries."

A hearing on the measure was scheduled for 1:30 p.m. Dec. 3 in the City Council chambers.

For a change in piggyback tax withholding to take place in the coming calendar year, notice of the increase -- if approved -- must be received by the state comptroller before Dec. 31.

PIGGYBACK TAX

Local income tax rates vary for residents of different jurisdictions. Should the Baltimore City Council approve Mayor Kurt L. Schmoke's proposal to raise the so-called piggyback tax, the city would join the upper ranks of taxed jurisdictions.

Prince George's County 60 percent

Montgomery County Goes from 55 percent to 60 percent Jan. 1

Allegany County Goes from 55 percent to 60 percent Jan. 1

Baltimore City Would go to 55 percent Jan. 1

Baltimore County 55 percent

Talbot County 55 percent

Worcester County Goes from 20 percent to 30 percent on Jan. 1

All other counties 50 percent

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