Mayor-council showdown on taxes possible

June 12, 1995|By JoAnna Daemmrich and Eric Siegel | JoAnna Daemmrich and Eric Siegel,Sun Staff Writers

Are Baltimore Mayor Kurt L. Schmoke and the City Council headed for a showdown over a cut in the property tax rate?

That's the multimillion-dollar question as the council prepares tonight to take up the $2.3 billion budget for the fiscal year that begins July 1. Mayor Schmoke insists that the financially strapped city -- which has reduced the property tax rate to its lowest point in two decades -- cannot afford another reduction.

But some council members -- pointing out that at $5.85 per $100 of assessed value, the city's rate still is the highest by far in the state -- are equally adamant that another cut is needed to help keep the city's middle class from shrinking further.

Each penny cut in the property tax rate saves the average city homeowner about $1.80 a year in taxes -- and costs the city $800,000 in lost revenue.

"We feel that this year any further tax cut would impact services," Mr. Schmoke said. He raised concerns over commercial reassessments that have depleted Baltimore's tax base and uncertainty over the amount of federal aid.

"I'm definitely going for a tax cut," said Councilman Joseph J. DiBlasi, who represents the 6th District and co-chairs the council's budget committee. He has identified $2.4 million in savings that could allow a 3-cent cut in the tax rate. He also wants to repeal the city's bottle tax, which would cut tax revenue an additional $1.3 million in fiscal 1996.

The opposing hard-line positions raise the specter of a replay of the budget battle of two years ago. In 1993, the council pushed through a last-minute property tax cut, prompting the mayor to veto the budget.

Mr. Schmoke's 1993 budget veto -- the first such action in 92 years -- necessitated a special council session. The mayor's budget, without a tax cut, passed decisively when nine council members switched their votes after intense lobbying by the administration.

This time, the budget deliberations are complicated by election-year maneuvering.

City Council President Mary Pat Clarke is challenging the mayor's bid for a third term in September's Democratic primary, while four of the 18 council members are vying to replace her. Almost all other council members have taken sides in the political feud between Mr. Schmoke and Mrs. Clarke.

"We keep having the same old, same old every year," said Wilbur E. "Bill" Cunningham, a 3rd District councilman who usually supports the administration. "If Mary Pat has a nickel cut, we'd like to see it. But I'm not ruling anything out."

Neither are most of the other council members.

At a council session Thursday night, Carl Stokes and Martin O'Malley huddled on the side to confer about finding enough money for a tax break. Mr. Stokes, a 2nd District representative who, like Mr. DiBlasi, is running for the council presidency, talked about savings in the education budget. Mr. O'Malley of the 3rd District talked about reducing the amount of money spent on outside legal services.

Mrs. Clarke announced she was ready to hold up the entire budget until she received answers about individual school funding. She said the budget shows at least two schools getting more money than they actually do.

Some council members are on the fence: Lois A. Garey of the 1st District is worried about cutting tax revenue while the city already is closing recreation centers. And Sheila Dixon of the 4th District says she would prefer lowering property taxes to repealing the beverage container tax.

"I would rather see a nickel off the property taxes this year rather than reducing the container tax," Ms. Dixon said. "We need to be competitive with the rest of the area."

Anthony J. Ambridge of the 2nd District said he will support a tax cut if the budget reductions can be found.

In an effort to head off a showdown, Mr. Schmoke last week sent a letter to council members urging them to "avoid any reductions city revenues this year." He said he planned to follow up with meetings and phone calls to key council members before tonight's vote.

The mayor's letter included an attachment arguing that the city in the last six years has provided homeowners with $87.6 million in tax relief -- $55.5 million in three nickel reductions in the tax, and $32.1 million through a 4 percent cap on assessment increases.

Mr. Schmoke called that relief "an incredible achievement during these tough fiscal times."

"I think that taken together, the council can say to the voters, to the taxpayers, that we have paid attention to your concerns, we have provided relief when we can," Mr. Schmoke said. "I'm hoping that argument will prevail."

The mayor is relying on more than simple persuasion to make his point. He is delaying signing a politically popular phaseout of the container tax.

But not everyone is buying his argument. The influential Homeowners Coalition for Fair Property Taxes, for example, is pushing strongly for a 5-cent cut in the property tax rate. The group argues that given the city's declining population, ways should be found to reduce the budget as well.

Chris A. Scitti, vice president of the group, said he has identified a number of areas of "questionable" spending, including $1.6 million for outside legal costs and a $1.6 million increase in the budget for the Enoch Pratt Free Library.

For her part, Mrs. Clarke said, "This shouldn't become an annual last-minute debate. I think we should plan for tax cuts, but now the council should look carefully at the budget for reductions."

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