Tax increases seem likely in budget crunch

$50 million gap noted in spending and revenue

`It's going to be very difficult'

Property, income levies discussed by Robey

Howard County

March 09, 2003|By Larry Carson | Larry Carson,SUN STAFF

Howard County's budget crunch means potentially big increases in both local income taxes and county property taxes, according to County Executive James N. Robey.

In his first statement outlining the county's fiscal problem using detailed figures, he used terms like "crippling blows" to describe holes punched in revenues by state budget cuts, lower investment income and fewer surplus dollars.

"Spending requests are almost $50.25 million more than our anticipated revenue," not counting more rumored state budget cuts, he said in a prepared announcement.

FOR THE RECORD - In an article in the Howard County edition of The Sun on Sunday about the threat of higher county income and property taxes, the amount of added tax that might be paid by someone with a $100,000 net income and a $200,000 home was incorrect. The added annual tax burden would be $280. In addition, a quote in the same article was attributed to the wrong person. County Councilman Ken Ulman of west Columbia said about the prospects of tax increases: "I didn't know the numbers were quite as high as that. I knew we would have to look at an income tax increase." In articles published Sunday and Thursday in the Howard County edition of The Sun, the impact of a local income tax increase from a rate of 2.45 percent to the legal limit of 3.20 percent on a taxpayer with a $100,000 net income was incorrect. An income tax increase of that magnitude would cost a resident with that income an extra $750 a year. In addition, a 10.25-cent increase in the county's property tax rate would cost the owner of a house worth $200,000 an extra $205. The Sun regrets the errors.

Just to meet built-in, fixed-cost increases, Robey said late Friday that the income tax rate would have to rise from the current 2.45 percent to the legal limit of 3.20 percent, and property taxes must increase 10.25 cents from $1.044 per $100 of assessed value.

But he still has not said he will ask for higher taxes when he presents his operating budget in mid-April.

Asked Tuesday about the chances of a tax increase, Robey said, "Common sense tells you it's going to be very difficult [to avoid]. I don't know yet."

The tax increases he outlined Friday, however, would cost someone with a $100,000 net annual income and a $200,000 house about $200 more each year.

Robey's announcement was intended to prepare citizens for his annual budget hearing Wednesday night.

"We're already getting e-mails [from citizens] asking us to fully fund this and fully fund that. This is a wake-up call," said Victoria Goodman, the county's public information director.

The Howard school board two weeks ago increased its request for county education dollars by nearly $4 million.

In his statement, Robey outlined the pressure that drove him to ask the county's state legislators for help by raising the property transfer tax to help build schools.

"I've made efforts over the last two months to communicate the gravity of the economic dynamics that are feeding the fiscal holding pattern in which we find ourselves today. Demands for service, on the other hand, are not on hold," he said.

"If there were doubts as to the breadth of the gap, I believe the numbers presented in this summary speak for themselves."

Raymond S. Wacks, the county budget director, said in trying to persuade the legislators to go along, "We told them we would need any tax increase to fund the operating budget." But the legislators refused, tabling the transfer tax plan without voting on it.

In his first term, Robey asked for two minor increases in the separate property tax levy that funds fire services. The County Council increased property taxes slightly in 1999 for schools.

In the last recession, in 1991, former County Executive Charles I. Ecker increased property taxes 14 cents, and he added a $125 annual trash fee five years later, cutting the income tax slightly in 1998 as he prepared to run for governor.

Reaction by County Council members to Robey's statement was muted.

"I've been saying similar things for months," though without specific figures, said council Chairman Guy Guzzone, a North Laurel-Savage Democrat. "There are going to be cuts everywhere," he said.

"I'm prepared to look at all options," said Ellicott City Republican Christopher J. Merdon. Freshman Councilman Ken Ulman, a west Columbia Democrat, also took a wait-and-see approach, saying, "It's been my understanding that these are extremely difficult times."

Still, Merdon and Ulman were surprised at the size of tax increases Robey discussed.

"Gosh, I guess he's setting the stage," Merdon said. "It's pretty huge," he said about the possible increases.

"I didn't know the numbers were quite as high as that. I knew we would have to look at an income tax increase."

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