$3 million revenue shortfall puts property tax cut in danger, Schmoke warns

March 18, 1994|By JoAnna Daemmrich | JoAnna Daemmrich,Sun Staff Writer

Faced with a $3 million budget shortfall, Baltimore cannot follow through on a promise to cut the property tax rate this year without slashing services, the mayor cautioned yesterday.

Mayor Kurt L. Schmoke said lower-than-expected tax revenues from downtown office buildings and utilities have left little room for property tax relief. The forecast for the fiscal year that begins July 1 isn't much better: Tax revenues are expected to stay flat.

"If we're going to take care of just the existing programs, then we would have to have the current [tax] level," Mr. Schmoke said at his weekly news briefing.

His warning about cutting the property tax rate -- which at $5.90 per $100 of assessed value is the highest in Maryland -- touched off what could be an encore of last spring's budget battle.

A number of City Council members said the mayor was backing down on a tax-break pledge he made last year. They said they plan to look closely at the city's $2 billion annual budget to determine whether they can salvage some tax relief.

"It was the representation of the administration that we would definitely be able to cut taxes this year," said Councilman Carl Stokes, a 2nd District Democrat. "I think the citizens are telling us we don't need to do everything; we need to do some things more efficiently, and we do want a property tax cut."

Last June, in an attempt to provide relief to city homeowners, the council passed a budget that cut a nickel from the property tax. Mr. Schmoke vetoed the budget, saying it did not provide enough money to hire additional police officers.

The revised budget maintained the property tax rate. In signing that budget, the mayor said he was "committed" to reducing the tax rate by at least a nickel in fiscal 1995, which begins July 1.

Council President Mary Pat Clarke, who clashed with the mayor over the budget last year, said she is prepared to seek a tax cut again.

"If you begin with a nickel a year and people know it's consistent, the agencies will prepare for it," said Mrs. Clarke, who plans to challenge the mayor in 1995 and wants to gradually lower the tax rate to a point no higher than 150 percent of Baltimore County's $2.865.

She said the city can scrimp and still improve public safety. "We don't have the luxury of doing one thing at one time. We have got to do several things at the same time."

With flat property tax revenues and a number of assessment appeals by commercial real estate owners, the city is unlikely to have much growth in its budget.

Revenues already are down by about $3 million in the city's approximately $800 million general fund, said Budget Director Edward J. Gallagher. It's unusual to have the shortfall, he said, but the city did not expect the large number of appeals.

The general fund is the city's principal fund, containing revenues that finance existing services and some construction projects. Education and motor vehicle funds, as well as federal and state grants, contribute to the overall $2 billion budget.

A cut of 5 cents in the tax rate would reduce general fund revenues by $3 million.

Councilman Anthony J. Ambridge, a 2nd District Democrat, said he fears the city's tax base will continue to shrink because homeowners will flee to surrounding counties to avoid paying such high taxes.

Councilman Wilbur E. "Bill" Cunningham, a 3rd District Democrat, predicted another showdown this year between the mayor and council members, especially the president, over the budget.

"Mary Pat is running for mayor, so she will have a drastic tax cut measure," he said. "On the other hand . . . I'm still not satisfied that we cannot make any cut from the tax rate."

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