Mayor to ask for boost in city revenue

O'Malley seeking to offset deep cuts in spending plan

`Have to do something'

Options include raising income tax, setting energy levy

April 12, 2001|By Gady A. Epstein | Gady A. Epstein,SUN STAFF

Mayor Martin O'Malley said yesterday that he will ask the City Council to approve a revenue increase to help him balance next year's budget, saying it's clear the proposed spending cuts in his preliminary plan are too deep for some departments.

O'Malley has said for more than a month that he is considering two tax options - increasing the city's income tax and imposing an energy tax on residents, nonprofit groups and manufacturers. He didn't narrow down those options or offer other possibilities yesterday, saying it's too early to determine what his administration will propose to the council.

"We'll have to do something, but what combination or what the rates would be, it's hard to say," O'Malley said yesterday after the weekly meeting of the Board of Estimates. He said his administration will cut spending as much as possible and ask the City Council "to make up the difference" with a revenue increase. "That's kind of our deal with the people," he said. "We're going to make whatever cuts we can before we ask them to [help]."

O'Malley is looking for additional sources of money besides taxes. This week, city agencies were asked to come up with suggestions, which could include increasing fees.

The mayor's preliminary budget, issued late last month, called for deep citywide spending cuts that could lead to more than 500 layoffs, though O'Malley said at the time that he was considering an increase in tax revenue to avoid some cuts. Only the Police Department, the mayor's top priority, is to receive a significant increase in spending.

The adminstration's preliminary bare-bones budget recommendations have been useful to the mayor on two fronts: They have forced city departments to identify what spending cuts they can make, and they have given O'Malley a strong argument for a tax increase to avoid the worst cuts.

For example, the mayor could go to the public and say he won't allow the Department of Recreation and Parks to close 20 recreation centers, which the department said would be necessary to meet the administration's budget targets.

Arguing to keep the centers is a popular position, and it would mean that more than 60 workers wouldn't get pink slips. Yet, the threat of the cut bolsters the mayor's case for taxes.

A growing number of City Council members are acknowledging that a tax increase is a necessity, saying the city should avoid laying off hundreds of workers.

City Council President Sheila Dixon said yesterday that she has spoken with the mayor about the two major tax options he is considering.

"I think we're going to have to" raise tax revenue, Dixon said. "I don't think we're going to have any other choice."

Dixon said the O'Malley administration would have to come to the council by the end of the month with any tax proposals to give council members time to act on them before the next fiscal year, which begins July 1.

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