Article erred on Baltimore's budget surplusThe March 6...


March 11, 1998

Article erred on Baltimore's budget surplus

The March 6 article "Another budget surplus expected" was terribly misleading and factually wrong. The city is not expecting a current-year budget surplus of more than $25 million. It is projecting a budget surplus for the current year (fiscal 1998) of approximately $5.5 million.

The revenue surplus of $20.8 million must be used to cover a projected appropriation deficit and prior-year adjustments of $15.3 million, leaving a projected budget surplus of $5.5 million.

The fire and police pension system is a separate trust fund, which has had significant unallocated interest surpluses over the past two years. That trust fund is supported by annual city contributions and investment earnings.

Any surplus accumulating in that trust fund is not a surplus of the city. The city cannot withdraw funds from the pension system; it can only reduce the amount of future city contributions. Pension fund surpluses are unrealized paper surpluses, the value of which is at the whim of the stock market and can go south very quickly.

The City Council is well-aware of these facts, as they were presented to members in a briefing arranged by the mayor for the purpose of sharing budget information for fiscal 1998, and progress in the development of fiscal 1999.

A copy of this briefing was given to The Sun.

For The Sun to combine a city budget surplus with an unrealized surplus in the pension system to conclude that the city if projecting a $25 million surplus this year is misleading, factually wrong and fuels unrealistic expectations.

The city is extremely pleased with the prospect of a $5.5 million budget surplus, as it compares favorably with surpluses of $1.8 million and $1.9 million for the past two fiscal years.

The March 6 editorial "Schmoke's surplus" was much more in tune with the mayor's policy on use of surpluses. The editorial recognized that surpluses are basically one-time sources of revenue, and as such should be allocated to one-time investments.

To build such resources into the operating budget would further exacerbate the city's current structural deficit by including additional ongoing costs for which there would be no revenue to support in future years.

Edward J. Gallagher


The writer is Baltimore budget director.

Councilman clarifies stance on hotel

A lot has been written and said about the Wyndham hotel project at Inner Harbor East. I would like to make my position clear.

I voted in favor of zoning for the hotel, after concessions about height and gambling were made by the developer. I have repeatedly said that I will not support any financial assistance by the city for the Wyndham hotel, or for any other hotel proposed for Baltimore.

I am against providing private developers with tax credits, loans, grants, payments in lieu of taxes (pilot), bonds, gifts of land and outright waivers of taxes.

In fact, I have introduced a bill that would prohibit all of these types of financial assistance for each of the three hotel proposals currently being considered. My position on this issue is consistent with my vote -- as the lone no vote -- against tax credits to the developer of the American Can site.

I am well-aware of the difficulties that private developers face in trying to build large projects. But as chairman of the City Council's Budget and Appropriations Committee, I am also aware of the tough financial situation that the city faces at budget time.

We just don't have money to assist private enterprise.

Each year, we on the council have to fight against proposals to increase property and income taxes. I am proud of the role I have played in fighting tax increases.

At a time when our libraries, schools, recreation centers, police and firefighters are strapped for funds, the private sector must stop looking to taxpayers for help.

Nicholas C. D'Adamo Jr.


The writer represents the 1st District in the Baltimore City Council.


We should continue to question our elected officials' defense of their stance regarding the public subsidies and favoritism provided for John Paterakis' Wyndham hotel project.

Basic economics tells us that hotels will be built in Baltimore soon. The demand and projected revenues are great.

In a free market, private businesses have the freedom to operate competitively. This is the market that Harvey Schulweis prepares to enter.

Mr. Schulweis is proposing a 600-room Westin on a site he owns, widely agreed by experts to be the most appropriate, and without public subsidies.

The 750-room Wyndham hotel proposal has been a subject of controversy since its conception: the location, the violations of the Urban Renewal Plan, the questionable backing by the mayor, the public expense, the community opposition and the tremendous height.

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