Tax-cap pressure cooker Tension between Gary, Parham inevitable due to a budget stricture that doesn't work.

June 08, 1998

CAROL S. PARHAM is not happy with next year's budget for the Anne Arundel school system she leads. In a uncharacteristic public display of pique, the superintendent contended that County Executive John G. Gary was "punishing" her department for its request of $61 million more next year.

Since assuming their offices a few years ago, Dr. Parham and Mr. Gary have worked well together and achieved compromises on a variety of thorny fiscal and policy issues. Their recent split isn't a matter of personalities finally clashing, but of frustration spilling over from consequences of the county's rigid tax cap.

The cap, approved by voters during the recession of 1992, limits growth in property tax collection at the rate of the local consumer price index or 4.5 percent, whichever is less. That restriction has finally caught up with the county, reducing to a trickle funds for education and other growing needs in spite of a healthy economy.

Property taxes generate 45 percent of the budget, so restricting the growth of those collections has severe repercussions. For the fiscal year that begins next month, property tax revenues will grow about 2 percent. Two years ago, the rate was 3.5 percent. Three years ago, it was 5 percent. Meanwhile, the cost of running government, of maintaining and replacing infrastructure and of serving more people, continues to rise. Were property tax revenues allowed to grow at 5 percent, Mr. Gary would have $10 million more to spend.

Anne Arundel's tax cap formula has been undermined by the same unusual dynamic that has allowed record low unemployment without triggering inflation. Although the county's economy is excellent and its assessable base is at a record high, the tax cap is based on inflation, as measured by the local CPI. The rate is now a minuscule .6 percent.

Whether in government or an individual household, stagnant income and growing expenses cause tension. This year's battle is just a preview of those that inevitably lie ahead for this county.

Pub Date: 6/08/98

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