Mayor vows no property tax rise

Income tax increase, expanded energy tax being considered

`Trying to look long-term'

March 04, 2001|By Laura Lippman | Laura Lippman,SUN STAFF

The city will look at increasing local income taxes and expanding an existing energy tax but will not consider an increase in property taxes, Mayor Martin O'Malley said yesterday.

Taxes, along with budget cuts and layoffs, must be considered because of a projected shortfall in the city budget. But O'Malley was adamant that the property tax, the highest in the state, will not be increased during his administration.

"I will absolutely, positively not consider raising the property tax, which is too high," O'Malley said. "And no one in my finance department has suggested we consider it."

The Sun incorrectly reported yesterday that the mayor was considering raising property taxes.

O'Malley acknowledged that he had opposed increases in income taxes as a city councilman and that he is not enthusiastic about the city expanding its authority to levy an energy tax.

"The trouble with that [tax]," O'Malley said, "is that it's regressive and we're all already paying too much to BGE [Baltimore Gas and Electric Co.]."

Peggy J. Watson, city finance director, said yesterday an income tax increase could generate an additional $10 million in fiscal year 2002. As much as $22 million could be raised by an expanded energy tax.

Commercial entities are taxed 8 percent on their energy bills. The administration is considering a 4 percent tax on other energy users, she said. The list includes residents, manufacturers and nonprofit organizations.

Like the mayor, Watson emphasized that the taxes were only possibilities. She also said the administration is "trying to look long-term," beyond the current crunch.

O'Malley reiterated that the city had only three ways to deal with the expected budget gap - tax increases, layoffs and cuts, which he refers to as "efficiencies." Nearly every city agency, with the exception of the Police Department, is bracing for cuts. Agency heads have been asked to cut $20.8 million for next year's budget and might have to come up with $21.7 million more.

O'Malley said yesterday that he believes the "lurch" will be short-lived.

As the city becomes cleaner and safer, the mayor said, tourism and new residents should increase, which would generate revenue.

"We've made a huge investment in making this city a safer, cleaner place," he said. "But between now and that bump [of increasing revenues], we've got to survive."

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