Another budget surplus expected Mayor, council differ on use of the $25 million

March 06, 1998|By Robert Guy Matthews | Robert Guy Matthews,SUN STAFF

City budget analysts, those traditional bearers of bad news, are delivering a surprisingly rosy report about city finances for the second year in a row.

Baltimore can expect a surplus of more than $25 million this year, they say -- a prediction that has battle lines forming between the mayor and City Council over how to spend the excess cash.

This year's windfall comes from the same sources as last year's $15 million surplus -- increased revenue from income and real estate taxes, parking revenue and higher-than-expected investment proceeds from the fire and police pension fund, which is tied to the booming stock market.

But Baltimore shouldn't celebrate too heartily, because bleak financial times are coming soon, the budget analysts said yesterday.

In two years, the city is on track to spend $29 million more than it takes in, budget officials predict. By 2001, the amount leaps to $55.6 million, they said.

Because city law requires that the budget be balanced every year, tough choices are ahead in those years for city officials: drastically cut services, raise taxes or a combination of both.

For this year, most of the projected surplus is from "income tax and pensions that are tied to the stock market," Mayor Kurt L. Schmoke said yesterday. "You can't plan your budget on one-time revenues."

The city's projected financial upturn is in part the result of $5 million more from income tax, parking revenues and recordation and transfer taxes. But most of it, $20 million, is from investments in the fire and police pension fund.

That $25 million surplus -- from an $819 million general fund budget -- can't necessarily be counted on next year, said city financial analysts, because the stock market might fall.

The mayor said he wants to spend the surplus on one-time grants and expenditures, such as giving a cash infusion to the Recreation and Parks Department and libraries. But council members are suggesting new programs, such as city-paid roof repairs for elderly citizens, and staff, including additional prosecutors and police officers.

"We won't have to raise any type of tax, that was the good side of the meeting," said Nicholas C. D'Adamo Jr., chairman of the council's Budget Committee. "But will people get a tax credit? No. Will the property tax be reduced? That's not going to happen."

Both sides are predicting that this year won't be as rancorous as last year's budget debate. Before the budget was approved, the mayor and the council were embroiled in a game of bitter one-upmanship over whether to raise taxes or cut services.

Neither side got what it wanted. The mayor, who wanted a tax increase, was thwarted by the council. But the council, which wanted to funnel money into its pet programs, was trumped by the mayor, who rejected its plans.

Pub Date: 3/06/98

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