City expects revenue surplus Strong U.S. economy, Baltimore real estate credited for windfall

Bonus could be $20 million

But several agencies also are overspending their fiscal '98 budgets

November 21, 1997|By Robert Guy Matthews | Robert Guy Matthews,SUN STAFF

The booming national economy and a rebounding local real estate market are expected to significantly increase Baltimore's tax collections and present an uncharacteristically rosy financial picture for the city this year, the chief budget analyst said yesterday.

But some of the predicted $20 million surplus in revenue is being offset by overspending in several city departments.

The Finance Department has ordered the Public Works, Recreation and Parks and Police departments to draft plans to curtail their spending.

By studying the first quarter of the budget year, which began July 1, city financial analysts are projecting considerably higher-than-expected income from property taxes, real estate transfers and recording fees. Parking tax and income tax revenues are projected to be slightly higher than was anticipated.

The projected $20 million surplus in revenues would represent an increase of almost 2.5 percent in the city's $823 million general fund. The general fund is the city's principal operating fund and makes up about a third of the $2.3 billion budget.

"The city is going to have a good year," said Edward J. Gallagher, Baltimore's chief budget analyst.

But later yesterday he tempered his upbeat prediction to the council's Budget and Appropriations Committee, which met to get financial updates from city agencies. The financial outlook "could change under different circumstances," Gallagher told the budget committee.

Last year, the city went through a wrenching budget process that pitted most of the council against Mayor Kurt L. Schmoke in an effort to balance the spending plan. The results were budget cuts for several departments and no new taxes, which had been pushed by the mayor.

After the budget was hammered out in June, city budget analysts said June income from property taxes and real estate transfer fees came in above projections. They reported that the city had a surplus of about $15 million.

That money was not used to restore cuts to such departments as Recreation and Parks, whose funding took a big hit in the budget fight. Instead, the surplus was used to bolster emergency reserves.

Budget committee Chairman Nicholas C. D'Adamo said he will hold quarterly budget hearings to avoid end-of-the-year surprises.

City financial analysts are predicting three possibilities for fiscal 1998, which ends June 30.

The most likely outcome, they say, is that the city would end the year with a $20 million surplus; the rosiest possibility is a continuing boom in the economy that would yield a $30 million surplus; and the leanest outcome would be a $10 million surplus.

The gains would be even larger if the Recreation and Parks, Public Works and Police departments reined in spending.

The recreation department is predicted to end fiscal 1998 about $3 million over budget -- which would represent almost 13 percent of its $25 million budget.

Acting Recreation and Parks Director Thomas V. Overton told the council committee yesterday that the expected overrun was the result of higher-than-anticipated costs of summer programs.

He also said the final transfer of several recreation centers to Police Athletic Leagues didn't take place until last month, which meant that funding for those centers came from the recreation budget until last month instead of the police budget.

Public works is about $2.6 million over budget -- about 5.6 percent of its $47 million general-fund budget. Gallagher said building maintenance costs caused the overrun.

The Police Department is also $2.6 million over budget -- about 1.4 percent of its $189 million budget.

Police Commissioner Thomas C. Frazier told the budget committee yesterday that he has implemented a plan to curb spending.

"Officers are required to reduce overtime expenditures by 25 percent," he said.

Overtime this year is expected to cost about $4 million, which would be 17 percent more than last year's approximately $3.4 million.

Pub Date: 11/21/97

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