Income tax revenue rose 9% in county last year Howard workers could get raise

September 26, 1993|By James M. Coram | James M. Coram,Staff Writer

Howard County officials learned this week that the county may have a greater increase in income tax revenue this last fiscal year, which ended June 30, than any other jurisdiction in the state.

Officials had hoped for even more.

County Executive Charles I. Ecker's budget gurus had forecast income tax revenue of $90 million. The actual amount, they learned last week, was $89.2 million, up 9 percent or $7.4 million over fiscal 1992.

Although "this is one of the strongest, if not the strongest, growth rate in the state of Maryland," Budget Director Raymond S. Wacks said last week, it is premature to assume the increase means a turnaround in the county's sluggish economy.

"We have no good answers yet," Mr. Wacks said. "We don't know how much is due to growth in personal income, to population growth or to bubble income."

The "bubble income" theory is that many Howard County residents, who are in a high-income category and knowledgeable about filing returns, would have declared more income in 1992 than 1993 because they were expecting a tax increase this year.

But regardless of the cause, the increase is nearly double the rate of tax revenue growth the county has experienced over the last two years.

Nearly 70 percent of the $7.4 million increase will be put into the county's rainy day fund. Mr. Ecker wants to use the remaining $2.3 million to give county employees their first cost-of-living increase since July 1990.

Mr. Ecker has asked the County Council to give employees a 2.5 percent increase beginning Jan. 1. The council will hold hearings on his proposal next month and vote on it in November.

If approved as expected, the increase for the 1994 fiscal year would amount to a 1.25 percent raise for the county's 1,699 employees, because half the fiscal year will have ended when the raises take effect Jan. 1. An employee earning the $32,759 county average will receive an extra $409.49 for the period from Jan. 1 to June 30.

School system employees were given a 3 percent cost-of-living increase in July. The system will receive $1.4 million of the $2.3 million Mr. Ecker wants to set aside for salary increases. The school board is expected to use the money to provide textbooks and supplies it had to cut from its budget when granting the cost-of-living increases.

Despite the pay increase, there was no jubilation in county corridors. Workers outside the school system said they were happy to receive a cost-of-living raise, but had hoped for more.

The budget adopted by the council in July included a contingency reserve that would have provided employees a 3 percent cost-of-living raise in January if income tax revenue rose 10 percent or more.

Although the 9 percent increase in income tax revenue is still "a good sign," Mr. Wacks said, "we have to gain a better understanding of where the money is coming from."

As the rate of increase in income tax revenue appears to be going up, the rate of increase in property tax revenue appears to be going down.

The state is now assessing property in the northeastern part of the county and in eastern Columbia, Mr. Wacks said, and early indications are that the assessments will increase only 1 percent to 1.5 percent per year. When last evaluated, the assessed value for those properties grew at a rate of 5 percent to 6.6 percent a year.

Property taxes and local income taxes make up 85 percent of the county's revenue. Growth rates for the county's other revenue sources are relatively flat, Mr. Wacks said.

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