Proposed tax increase draws early criticism Some council members, business leaders opposed to Schmoke's plan

April 17, 1996|By Robert Guy Matthews and Sean Somerville | Robert Guy Matthews and Sean Somerville,SUN STAFF

Vowing to oppose the mayor's proposed 10 percent increase in the piggyback income tax, some Baltimore City Council members accuse him of using blackmail tactics on them: Back the tax or take the blame for deep cuts in city services.

At least six of the council's 19 members have said that they are not willing to raise the piggyback tax, which would jump from 50 percent to 55 percent of the state income tax and take effect Jan. 1.

"We are being blackmailed," said 1st District Councilman John L. Cain, who said he would not support the mayor's proposal. "Why can't he cut something else? Like the people on the mayor's staff."

Mr. Cain said that if the tax proposal is defeated, the council will look as if it does not want to keep libraries and fire stations open.

Other council members say they would follow the mayor's lead if he can prove that it's a last resort; the remainder say they need more time to study the budget.

To pass, the proposal -- which the council will wrestle with as it works on the budget over the next two months -- would need 10 votes.

Council members say they will listen to city residents. Already, some business leaders are critical.

'One more hurdle to cross'

"The 50 percent piggyback tax is one of the things the city has going for it," said Sherry Welch, president of the Baltimore City Chamber of Commerce. "When people cite high property taxes, we can say, 'Yes, but we have a lower piggyback tax.' This increase takes that whole argument out of the realm of possibility. There are enough battles to fight in selling Baltimore City as a place to work, play and live without having one more hurdle to cross."

A. B. "Buzzy" Krongard, chairman and chief executive officer of Alex. Brown Inc., said that he couldn't figure out how the increase fits into a long-range plan to attract business to the city. "If it's part of some strategy, he should articulate that strategy," Mr. Krongard said of the mayor.

The proposed tax increase would generate $4.9 million in the first six months if passed. It would affect only those who live in Baltimore City.

Last month, the Schmoke administration drafted a plan to cut Pratt Library funding by $3.5 million -- prompting outrage from council members and residents. Fire stations have also been closed on a rotating basis because of budget shortfalls, also angering residents.

"You don't have to be a rocket scientist to see [the mayor's] strategy," said 5th District Councilwoman Rochelle "Rikki" Spector, who said she might have to back the tax to ensure the same level of city services.

The mayor quietly met Monday with selected council members and asked them to "keep an open mind" about the tax increase. He excluded some council members who traditionally oppose his policies, including Mr. Cain and 3rd District Councilman Martin O'Malley.

"He was putting feelers out there to see if he had 10 votes," said 1st District Councilman Nicholas C. D'Adamo, who said he would likely vote against the tax proposal. "He didn't want to be embarrassed if the 10 votes weren't there."

In 1992 and again in 1993, the council voted down Mr. Schmoke's attempt to raise the piggyback tax. But this council body, elected in November, has so far supported Schmoke administration policies.

"Ultimately, the support for the piggyback tax will come from the libraries and the Fire Department" officials who do not want to suffer the cutbacks, said 3rd District Councilwoman Joan Carter Conway, who said that she would not back the mayor's proposal.

Firefighters union's support

Indeed, representatives of Baltimore Firefighters Local 704 said yesterday that they would lobby council members to support the proposed tax increase.

The union would support "anything that gets money in the Fire Department budget," said union 1st Vice President Rick Schluderberg. The union has publicly criticized the Schmoke administration's fire station shutdown policy.

Alex Doyle, president of Micro Machining Inc. and chairman of the Maryland Manufacturers Association, called the proposal "an awful thing to do."

"The last thing the mayor should be doing is raising any taxes at all," he said. "His problem is not tax rates. It's tax base. It's going to mean the migration of many skilled employees out of the city."

But Michael A. Conte, director of the Regional Economic Studies Institute of Towson State University, called the tax increase a good idea.

"It's regrettable because Maryland jurisdictions in general and Baltimore City in particular need to be thinking about lowering taxes," he said. "But I believe it's the right move for the city at this time. It's more important for the city's finances to be on sound footing than it is to attempt to ignore reality."

Pub Date: 4/17/96

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