Glendening backing bill to aid county

Governor, Owens eye exemption plan to stem fiscal woes

`The politics are beginning'

Change in utility tax could have cost $8 million in '03

January 23, 2002|By Lynn Anderson | Lynn Anderson,SUN STAFF

Gov. Parris N. Glendening and Anne Arundel County Executive Janet S. Owens have worked out a plan that could help the county sidestep a potential $8 million budget shortfall in 2003, a spokesman for the governor said yesterday.

"We intend to make some provisions that would account for [Anne Arundel's] circumstances," Glendening spokesman Michael Morrill said, referring to the county's voter-approved tax limit, which triggered the budget scare.

Morrill said the governor is considering legislation that would give the county a narrow exemption to the tax ceiling.

County officials have been worried since last week, when they learned that the governor's proposed $22.2 billion budget could inadvertently crimp the county's ability to collect property taxes.

As news of Glendening's fiscal plan spread, so did the alarm.

By yesterday, most members of the county's General Assembly delegation were aware of the potential for a monumental fiscal hit, if not the details.

"The delegation knows that there is an $8 million problem," Owens, a Democrat who is seeking re-election this year, said yesterday. "Now they just want to know how to solve the problem."

Del. Joan Cadden, a Brooklyn Park Democrat and a leadership member of the House Appropriations Committee, said that the governor's budget plan, as proposed, would be "devastating" to the county.

"I'm sure it is something we are going to discuss at length before we get much further into the budget process," said Cadden, who was briefed on the plan Monday, the day after a story outlining the situation ran in The Sun.

Glendening, in an effort to balance the 2003 state budget, wants to do away with property tax breaks for utility companies. That would also end a grant program worth $30.6 million to counties such as Anne Arundel that have power companies in their jurisdictions.

Under the 1999 deregulation law, the power companies in the state received a 25 percent reduction in property taxes, starting in 2000, and counties were compensated through these grants.

Last year, the credit was worth a 50 percent rate reduction. Anne Arundel officials said the state grants were not counted as property tax revenue or figured into the tax limit and cannot be recouped.

Although two large electrical power plants owned by Constellation Energy Group would return to the tax rolls, the loss of the grant would cost Anne Arundel because of the revenue-based tax ceiling.

The county's tax limit dictates that year-to-year increases in property tax revenue may not exceed the annual rate of inflation or 4.5 percent, whichever is less.

Additional revenue from the power plants would force the county's tax rate lower, from 96 cents to 93 cents per $100 of assessed value, for a savings worth $50 a year to the average homeowner.

"The politics are beginning," Owens said, referring to conversations she and members of her administration have had with legislators recently. A dinner meeting with members of the Senate Budget and Taxation Committee has been set for Feb. 6.

Glendening's proposal to end the tax credit program will require special legislation called an "omnibus budget reconciliation act." The bill could be amended by legislators, some of whom might not sympathize with Anne Arundel.

"I'm not making any promises to anyone because there will be no sacred cows in this budget," said Sen. Barbara A. Hoffman, a Baltimore Democrat who is chairwoman of the Senate budget committee. "All I can promise is that we will take a good look at it."

Hoffman said that county officials might want to reassess the tax limit, which voters approved in 1992. "Maybe they shouldn't have a tax cap," she said. "In a way, this is a self-inflicted wound."

Lobbyists for utility companies also are gearing up for a debate.

"We are very concerned about this proposed change," said Rose Maria Kendig, a spokeswoman for Constellation Energy Group, the parent company of Baltimore Gas and Electric Co.

Whatever may come, county officials say they are relieved to learn the governor will back their efforts.

"Clearly it was not the intent of the governor's proposal for this to have a negative effect on the county," said county Budget Officer John Hammond, who spoke by telephone with state Secretary of Budget and Management T. Eloise Foster yesterday afternoon.

"I think she understands how this would affect the county and I think we should be able to work this out," he said.

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