Schmoke's surprise Budget shortfall: It's time to re-evaluate what the city can afford with its tax base.

January 05, 1996

ISN'T IT FUNNY that revenue projections always look better before an election? City officials have known for months that court appeals of property tax assessments might reduce the revenue collected. Last year the city refunded $4 million in property taxes and collected $3 million less than budgeted because of successful appeals. Still, no one predicted the $9 million revenue shortfall that Mayor Kurt L. Schmoke now says he expects this fiscal year. About $4.3 million of that is due to successful appeals of property tax assessments.

That's what happens in a city which keeps losing its affluence to the suburbs. Downtown buildings that used to be full of workers aren't valued as highly when they're half-empty. No property owner, out of the kindness of his heart, is going to keep paying the city taxes that are based on yesterday's realities.

Adding to the problem was the federal government's purchase of the Garmatz Building that it was leasing on Lombard Street, thus eliminating $800,000 in expected property tax revenue. Budget officials say lower income taxes, public utilities taxes and interest earnings make up the rest of the $9 million shortfall.

Combine that with the $32 million deficit in the public schools' budget and Mr. Schmoke has a real financial crisis on his hands. He says he is optimistic that the problem can be handled without layoffs by cutting spending and getting employees to take early retirement. But that looks like wishful thinking. Particularly when it comes to school system layoffs. Mr. Schmoke had hoped to find help for the schools with economies in other departments. Now those departments will be trying to make cuts to keep themselves whole.

It's time for the mayor to stop handling the city's budgets on a crisis management basis and write spending plans based on Baltimore's true situation. He says he won't propose any property tax cuts or employee raises for next fiscal year. Good. But that's not enough.

Mr. Schmoke has cut the number of city workers from 30,000 to 26,400 employees in eight years. It's time for him to take an even closer look at each department and decide what a city with Baltimore's eroding tax base can truly afford. Tax revenues aren't going to get much better anytime soon, but they could get worse. Mr. Schmoke should plan for that possibility so he won't have to cut corners later to meet expectations that never could be met.

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