Schmoke's case for tax rise

April 28, 1996|By Kurt L. Schmoke

The following is an open letter to the citizens of Baltimore from Mayor Kurt L. Schmoke. No one likes to pay taxes. And no one likes to raise them. Those are givens. But in the words of a great jurist from the past, "Taxes are what we pay for a civilized society."

Those words have relevance to Baltimore City today as we find ourselves facing two basic choices if we are to maintain a balanced budget, which I am obligated to do, and maintain our quality of life, which I am committed to do.

We must find new revenue sources, or we must reduce the government services that are so essential to preserving the city's quality of life.

The correct choice is clear: We must find new revenue sources, and we must do so now. That is why I recently proposed that we raise the city's piggyback income tax -- which is a percentage of the state income tax -- from 50 percent to 55 percent.

Given the financial conditions of Baltimore City, I see no other alternative. We face a revenue shortfall of about $8 million to fund basic city services for the 1997 fiscal year. This shortfall results from such realities as a stagnant property tax base, cutbacks in state and federal funding, and flat growth in other revenue sources.

We cannot count on potential revenues, such as those that would come from putting slot machines at race tracks. We should not raise the property tax rate, already the highest of any jurisdiction in the state. An important part of our strategy to attract more businesses and residents to the city is to lower the property tax rate, which I have done three times since I came into office. Nor can we expect additional cuts in expenditures alone to do the job.

Under my administration, the city has been both diligent and vigilant about controlling expenditures. We have reduced the number of city employees from 30,000 when I first became mayor (nine years ago) to 26,400 today, and we are instituting early retirement incentives to reduce the city work force even further.

We have also cut expenditures by increasing efficiency in our delivery of services and by eliminating duplication. For example, we merged the Department of Transportation into the Department of Public Works and the Urban Services Agency into the Department of Housing and Community Development. We also consolidated the printing and graphics arts shops of several city agencies into one unit.

Moreover, we have privatized some city services, initiated a program to reduce energy consumption in city buildings, and set up a new unit to study city operations and make recommendations for improvements. We will continue with these efforts, and others, as part of our ongoing drive to increase productivity and reduce costs.

But the fact remains that without an infusion of new revenue, we will still be forced to cut essential services.

This means the city would have to close library branches, recreation centers and neighborhood swimming pools. We would also have to curtail some operations of the Baltimore Museum of Art and reduce the staff of the States Attorney's office at a time when the office is overburdened with cases. And more.

I don't believe the citizens of Baltimore will support such harsh measures to balance the budget. A factory in economic distress can cut out a product line. But when a city, trying to avoid economic distress, does that -- cuts off services -- people are hurt and the quality of life is diminished for all.

We can avoid this alternative by raising the piggyback income tax, as other jurisdictions have done. Raising it to 55 percent in the calendar year beginning Jan. 1, 1997, would bring in about $4.9 million in additional revenue in fiscal year 1997. That will not solve all our budget woes, but it will lessen the need for drastic cuts in services.

A 55 percent rate would mean that a person having an adjusted gross income of $20,269 a year would pay only $34 a year more in taxes. That amounts to 65 cents a week, the cost of a small bag of potato chips. Surely, that is a small price to pay for making it possible for a child to continue to go to his neighborhood library after school to read a book, browse the Web, or do his homework in a quiet, nurturing place.

And surely, that is a small price to pay to enable children to continue to enjoy the kind of recreational activities and benefit from the kind of positive mentoring that are available through the city's recreation centers.

A 55 percent piggyback rate would also bring Baltimore City in line with other major jurisdictions in Maryland that have raised their rates above the 50 percent level. Baltimore County has implemented a 55 percent rate, while both Prince Georges and Montgomery have set their rates at 60 percent.

So even though I know it is never popular to call for an increase in taxes, I am confident that you will understand why we must do so at this time. Government must serve the people; and it must have the resources to do so. That's the bottom line.

Pub Date: 4/28/96

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