Board OKs mayor's budget

$2 billion plan proceeds to council for consideration

May 10, 2001|By Neal Thompson | Neal Thompson,SUN STAFF

The Board of Estimates approved yesterday Mayor Martin O'Malley's second budget, despite last-minute opposition from City Comptroller Joan M. Pratt, who objected to the layoffs and tax increases that are components of the mayor's budget-balancing plan.

Pratt, who sits on the five-member Board of Estimates, was the only member to vote against the $2 billion spending plan, which heads to the City Council for consideration.

O'Malley, who sits on the board and controls three of its five votes, marked the occasion with some of his broadest comments on the budget, which he acknowledged asks residents to pay more and receive less, but which is "the foundation of a long-term strategy."

"The modest [tax] increases that we're asking for are investments that are going to turn this city around," O'Malley said during a 30-minute defense of his budget.

Pratt said she voted against the mayor's spending plan on the basis of two proposals needed to balance the budget -- one would impose an 8 percent energy tax on nonprofit organizations and another would increase the city's income tax by 20 percent. Both measures are pending before the City Council.

"I'm opposed to the layoffs and I'm opposed to the piggyback [income] tax, and I'm opposed to the energy tax on the nonprofits and the churches that serve the poor," said Pratt.

Comptroller's objections

She said the budget as proposed, especially layoffs in the Department of Public Works, was "not meeting the needs of the city."

Pratt suggested two 11th-hour alternatives to O'Malley's plan. She said at least $3 million could be collected through a tax amnesty plan that would seek to recoup some of the $34 million in delinquent property taxes. Another $17 million could be shaved from the budget by persuading city workers to work one unpaid "furlough" day a month, she said.

Neither proposal was formally considered yesterday.

City Council President Sheila Dixon, who is chairwoman of the Board of Estimates, said that budget discussions have been going on for months and that Pratt should have made her suggestions earlier in the process.

Dixon also said a furlough plan -- similar to one enacted during a 1991 budget crisis under former Mayor Kurt L. Schmoke -- was a "Band-Aid" that "did not deal with the structural budget problems that we've been putting off for a long time."

City Finance Director Peggy J. Watson told Pratt that a furlough plan had been considered by her office, but was rejected in favor of longer-term efforts to raise revenues. Watson also said it would be difficult to collect delinquent taxes because many of those taxes are assessed against abandoned properties.

`Balancing act'

"It's a balancing act. We don't really enjoy doing some of the things we have to do," Watson said. "But we feel fairly confident that we are putting together a plan that will help us turn the corner."

The most contentious aspects of the plan are a proposed 8 percent energy tax on nonprofit organizations -- a levy imposed only on commercial businesses, and one that city churches have rallied against -- and an increase in city residents' income tax rate from 2.54 percent to 3.05 percent, beginning Jan. 1.

Even if the council approves the tax increases, the final budget would result in 146 layoffs and the elimination of 99 vacant positions, officials said. The council has scheduled its first budget briefing for May 24.

O'Malley said yesterday that his budget is founded on a long-term plan to generate more revenue for the city and allow the city to someday start cutting its property tax rate, the highest in the state. He said the many construction cranes poking up from the skyline are "irrefutable signs" that he's on the right track.

"By adopting this budget, we're saying we're not content to slip back into the management of decline," O'Malley said, sometimes referring to prepared notes and sometimes speaking extemporaneously. "This is what we need to do to make revenue grow."

As he has said in recent months, O'Malley's two goals throughout the budget process were making Baltimore a safer, better place to live.

"And that's what this budget calls on our city to do," he said.

Windfalls expected

In recent days, O'Malley has received unexpected good budgetary news. Because of a processing glitch in the state comptroller's office, the city might receive a $9.3 million windfall -- tax money that had been mistakenly given to Anne Arundel County. The city also might receive an additional $2 million to $3 million from Verizon, which has failed to collect $7 million in local telephone taxes from customers in Baltimore City and Baltimore and Anne Arundel counties.

O'Malley said yesterday that he would not use those funds to alter his budget plans, but might fund a summer jobs program in which school-age workers would clean city parks and pay city debts.

He said the Department of Housing and Community Development owes $5 million to the Housing Authority of Baltimore City, and the city owes $2.3 million to the city school system for accrued employee vacations.

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