Tax cut: politics at work

May 31, 1994|By JoAnna Daemmrich | JoAnna Daemmrich,Sun Staff Writer

Amid a flurry of self-congratulatory hype, Baltimore is about to give its overburdened homeowners a tax break. But the average reduction won't even cover a parking ticket.

The real savings in the proposed nickel reduction of the property tax rate can be measured more in political goodwill than in dollars and cents. For the owner of a home worth $45,000, the median in the city, the move would reduce this year's tax bill by $9.09.

So what prompted the rush by city officials to cut taxes?

Economic experts and political observers say Baltimore homeowners can thank the early start of a tough mayoral race and an attempt to slow middle-class migration to the suburbs.

"It's symbolic in a sense," said Dr. Patricia Florestano, a professor of government and public administration at the University of Baltimore. "What the mayor and council are trying ,, to do is signal they understand that property taxes are high and people are leaving."

Clearly, the intricate dance between Mayor Kurt L. Schmoke and City Council President Mary Pat Clarke was a key factor in negotiating a cut in the tax rate, which at $5.90 per $100 of assessed value is by far the highest in Maryland.

Both have announced their candidacies for mayor in 1995. And they appeared determined to avoid the brinkmanship over the budget that caught up all city lawmakers last year.

"The political will was there this year," said 2nd District Councilman Anthony J. Ambridge. "I think the mayor saw the writing on the wall. Mary Pat, I think, was concerned that he would make the council look stupid again."

A year ago, emboldened by their successful fight against increasing the piggyback income tax, council members tried to lower the property tax rate by 5 cents.

Mr. Schmoke vetoed their attempt, saying he needed the $4 million to hire more police officers. The council backed down and upheld his new budget.

Some saw Mrs. Clarke's orchestration of the tax cut effort last year as an opportunity for her to advance her own agenda and embarrass the mayor. Mr. Schmoke's veto was described as a chance to put down the rebellion she had kindled.

The wrangling led to questioning of the mayor's leadership, Mrs. Clarke's opportunism and the council's conviction. Council Vice President Vera P. Hall summed it up as "tacky."

"Personally, I think the council looked real bad," Mr. Ambridge said. "Those people who vacillated last year weren't going to this year."

2nd District Councilman Carl Stokes, one of the nine council members who switched votes on the tax cut last year, said he wanted to keep his word to constituents.

"We went in and told the mayor we really wanted to find a way to plan for decreasing the tax rate," said Mr. Stokes, who will seek the council presidency next year when Mrs. Clarke challenges Mr. Schmoke.

A half-dozen other council members have ambitions for higher office. Two have announced their candidacies for state seats, two are considering races for city comptroller, and Mrs. Hall plans to challenge Mr. Stokes for the council's top position.

"I think many of our policy discussions are viewed through the lens of election politics because both the council president and myself have announced our intentions to run for mayor next year," Mr. Schmoke acknowledged.

Still, the mayor and council members say the tax cut was more of a substantive decision than a political one. They describe it as the first in a series of reductions designed to bring the tax rate to no more than 150 percent of Baltimore County's rate -- which recently dropped by a penny, to $2.855.

Mr. Schmoke acknowledged that a nickel drop alone is not likely to encourage suburbanites to move back to Baltimore, but he said it "sends the right message." Mrs. Clarke likened it to a groundbreaking ceremony, the start of a broad program to economically revitalize the city.

When the city reduced its tax rate by a nickel in 1990 and again in 1992, the council found a substitute for the lost revenue through a solid-waste surcharge.

This year, the city is moving ahead with a cut at a time of shrinking income from property taxes, losses in state support and other bleak fiscal news.

To achieve the tax break and offer a 2 percent pay raise to municipal employees, the city raided its $4 million surplus and deferred nearly all of its pay-as-you-go construction projects.

The $8 million scraped together from both accounts is a tiny percentage of the overall $2.2 billion budget, yet is not insignificant.

With $4 million, the city could hire 120 police officers or 154 beginning teachers, or could offer its workers a 4 percent raise.

Budget Director Edward J. Gallagher said he never considered wiping out nearly all of the $6.4 million allocated for bread-and-butter projects such as roof repairs, renovating piers and landscaping.

"This is not as though the city is flush with cash," Mr. Schmoke said. "It represented some difficult choices."

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