Council warned of impending shortfall

Baltimore lawmakers must cut services or find new revenues

$153 million over 4 years

May 27, 1999|By Gerard Shields | Gerard Shields,SUN STAFF

Baltimore Budget Director Edward J. Gallagher cannot say it any simpler: City coffers are about to run dry.

The 17-year budget director, who served through the administrations of the past three mayors, delivered the bad news this week during budget deliberations.

City Council members are now looking at taxing everything from boat slips to cellular phones to make up a projected $153 million deficit over the next four years.

Under state law, the city cannot end the year with a budget deficit. That means the council and Baltimore's next mayor will have to slash basic services or find new tax money, Gallagher said.

"The city's limited revenue is exhausted and by itself can no longer preserve the basic public services needed to stabilize our community and support its economic growth," he said.

The cost of providing services from police protection to city swimming pools has outpaced the city's income, the property tax.

Although next year's budget -- the final in the 12-year tenure of Mayor Kurt L. Schmoke -- contains enough revenue to allow the city to break even, projections for subsequent years contain lots of red ink.

Worse yet is that city departments, ranging from the state's attorney's office to police, say the money that the city has allocated to them isn't enough.

State's Attorney Patricia C. Jessamy said she needs $650,000 more to implement a full-time review of arrests that is expected to reduce the clog in city courts that late last year resulted in two carjacking suspects being freed when it took too long to bring them to trial.

Police Commissioner Thomas C. Frazier said his $199 million budget, which includes a $7 million increase is inadequate, too.

He will lay off civilian workers and ill their jobs with patrol officersif additional money is not found, Frazier said.

The first ripple of the budget woes washed ashore yesterday at the city Board of Estimates meeting.

Recreation leaders requested, and the five-member board approved, increases in fees for city pools, basketball leagues and rental facilities that could bring in an additional $60,000.

Unless the city can find more money, residents can expect more of the same, Gallagher said:

"There is an extremely serious financial problem facing the city over the next few years."

City money problems are nothing new, particularly during budget season when everyone postures for more funding. This time, Gallagher said, the administration isn't crying wolf.

As the result of an exodus that city planners believe is 1,000 residents a month, the income the city generates from property taxes has reached its maximum $470 million.

Meanwhile, the operating budget -- which pays for city services -- will rise $40 million.

Council members have been warned. Despite a similar warning about the imbalanced structure of city financing, the council voted last year to reduce the property tax by 3 cents per $100 of assessed value, which amounted to a $16 savings annually for the average homeowner.

As Gallagher delivered the bad news at budget deliberations this week, West Baltimore Councilwoman Sheila Dixon made sure council members noticed.

"Are you listening to him?" Dixon shouted. "He's been saying it for X amount of years. Obviously, this council is not hearing it."

Council members such as Budget and Appropriations Chairman Nicholas C. D'Adamo Jr. blame the Schmoke administration for the problem.

D'Adamo said he and other council members have repeatedly proposed new tax sources, only to have Schmoke -- who controls 10 votes on the 19-member council -- strike them down.

Among the ideas being discussed are:

A $1 tax on tickets to Camden Yards sporting events. The surcharge on Baltimore Orioles and Baltimore Ravens games would bring in $5.1 million a year, which D'Adamo wants to dedicate to recreation. Schmoke has warned the council that getting approval from the state legislature could lead to cuts in city aid.

A boat-slip tax. The increase in the number of boats docking along the Inner Harbor could bring in as much as $300,000. Anne Arundel County had a 10 percent docking tax that it phased out in 1997.

Taxing nonprofit properties. Taxing Baltimore's nonprofits, including hospitals, could bring an additional $4.6 million. The move is not likely, given the politically powerful nonprofit community.

Fire alarm fines. The council is considering fining businesses when security systems malfunction and result in police or fire responses. The fines could bring in up to $500,000.

Wireless phones tax. Similar to the tax on home phones, revenue from the rising cell phone industry could bring in as much as $2 million.

Container tax. The on-again, off-again 2 percent tax on beverages 16 ounces and larger would bring in $6.2 million.

Increasing frustration for council members is that if the state permitted the city to impose a commuter tax on suburban residents working in Baltimore, the city could retrieve up to $4 billion annually, twice its current budget.

Another part of the equation frustrating citizen groups is the city's willingness to grant multimillion-dollar tax breaks to new development.

In the midst of the city's budget woes, the council is getting ready once again to approve tax exemptions valued at $25 million to $75 million for owners of the new Wyndham Hotel being built at President and Fleet streets near the Inner Harbor.

The city will also use exemptions to lure development in its $350 million plan to renovate the west side of downtown. As the council heads into the final weeks of budget deliberations before the city's fiscal year begins July 1, Gallagher said the administration and council will have to reach a consensus to find new money or cut services.

"We need to raise sufficient revenue to support basic services," Gallagher said. "It is a problem that needs to be fixed."

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