Mintz proposal for election-year tax cut brings sharp response from budget chief

May 11, 1994|By Larry Carson | Larry Carson,Sun Staff Writer

The idea of getting a small election-year property tax cut by taking money from Baltimore County's new rainy day surplus fund sparked a sharp exchange yesterday between Councilman Melvin G. Mintz and Budget Director Fred Homan.

During a budget work session, Mr. Homan reacted angrily to Mr. Mintz's suggestion that the $2.9 million budget appropriation that Executive Roger B. Hayden wants to add to the county's surplus fund -- termed the Economic Stabilization Fund -- instead could be used to trim 2 cents off the county's property tax rate of $2.865 per $100 of assessed value.

"This is a target area," said Mr. Mintz of Pikesville, who is a Democratic candidate for executive.

Councilman Charles A. Dutch Ruppersberger of Timonium, another Democratic executive candidate, also indicated he was looking at the fund as a possible place to cut.

His face reddening, Mr. Homan rose to warn the council "not to make a long-term cut in revenue by cutting a one-time budget item like the surplus fund appropriation."

"You didn't worry about that in 1991, when the executive cut 2 cents," Mr. Mintz snapped.

"Yes, and the council added a cent, sir," Mr. Homan fired back.

The budget director said later his point was that the county will suffer long-term revenue losses from a property tax cut, because those cuts are cumulative over the years.

For example, 3 cents cut in the 1991-1992 budget year cost the county $4.1 million in tax revenues that year, Mr. Homan said. But by the end of next year, fiscal 1995, the 3-cent cut will have cost the county $17.5 million in lost revenues, he said.

And, cutting a one-time contribution to the rainy day fund to cut 2 more cents off the tax rate next year won't compensate for revenues lost in future years, Mr. Homan said. In effect, he said, it will be a built-in potential deficit.

At the session, Councilman Donald C. Mason of Dundalk, the council's most ardent property tax foe who is retiring from office after this year, offered an easy -- if surprising -- solution for Mr. Homan's problem. "Next year, the council can raise the tax rate," Mr. Mason said.

Mr. Homan replied that recent political history would dictate that no elected official is likely to propose

raising the property tax rate any time soon.

A tax revolt in 1990 led voters to throw an incumbent county executive and five of seven county council members out of office.

He argued that the Hayden administration compensated its earlier tax decrease with long-term, structural trims to the county budget.

In past years, Mr. Mintz's suggestions that 1 or 2 cents can be cut from the property tax rate privately have infuriated his colleagues, who felt he was jockeying for political advantage.

Mr. Ruppersberger said the cut may be reasonable this year since the county has achieved its minimum 3 percent standard of the county's total budget for a surplus fund even without the $2.9 million Mr. Hayden wants to add. Each penny on the tax rate brings in an estimated $1.5 million in revenues. The fund will be $26 million if the $2.9 million is not included.

However, Mr. Homan said the county's goal is to have a surplus fund equal to 5 percent of the county's budget, or $44.6 million.

Administration officials have stressed the fund is needed to guard against future economic crises and unplanned state cuts in local aid and to protect the county's bond rating.

Although the budget deliberations are preliminary, other council members said they want more police officers and a much stronger effort to attract new businesses.

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