Officials unveil budget plan

$244.7 million proposal seeks 0.2 percent rise in personal income levy

`Some wiggle room this year'

Recordation and transfer taxes could increase, too

April 18, 2003|By Mary Gail Hare | Mary Gail Hare,SUN STAFF

The Carroll County commissioners unveiled a $244.7 million budget yesterday that proposes a slight increase in the personal income tax and several provisions that are expected to make growth pay for itself.

The budget includes money for two new schools and a new senior center in South Carroll, the county's most populous area. It ensures Carroll's commitment to agricultural preservation and $2 million to road repairs.

The effect of looming state budget cuts could remain unknown even when the commissioners adopt the budget late next month. Carroll could escape without much damage from state cuts this year, but 2005 could bring problems.

"We have some wiggle room this year," Commissioner Dean L. Minnich said. "But next year will be really tough. We will have to raise taxes or come up with other sources of revenue."

The proposed 0.2 percent increase in income tax would generate about $2.5 million in revenue in fiscal year 2004, which begins July 1. Because the tax is computed on the calendar year, it could add as much as $5.3 million next year. The average taxpayer would see about $90 more on the annual tax bill.

"The idea of the increase will probably bother people more than the actual expense," said Ted Zaleski, county director of management and budget.

The average homebuyer would pay about $660 more in settlement costs because of the $1.50 per $500 increase in the recordation tax, which the proposed budget sets at $5. The increase, paid by the buyer and the seller, would add $3 million to county revenues.

"There are not too many people who base their home-buying decisions on $660," said Zaleski.

The commissioners will also ask the legislative delegation for authority to impose a 1 percent transfer tax on all real estate transactions next year, a proposal that would add about $5 million in annual revenue.

"It won't make sweeping changes, but $5 million can increase levels of service," Zaleski said.

The commissioners could have difficulties getting the proposal through the 2004 session. Sen. Larry E. Haines, leader of the Carroll delegation, said yesterday that he would oppose the measure.

"I want to hold the line on taxes," said Haines, owner of a Westminster real estate company. "We are running into a cycle of slow growth and we won't need an increase."

Carroll, like many other Maryland counties, has seen a tremendous increase in property assessments, which Haines called "built-in increases for local governments." No other changes are necessary, he said.

The recordation and transfer taxes are ways to fund the infrastructure demanded by growth, officials said. The commissioners insist that growth must pay for the additional schools, roads and utilities it demands. They are studying costs associated with development review, permits and impact fees to determine if the county fees are sufficient.

"It is important for the public to understand that development does not carry its weight," Commissioner Perry L. Jones Jr. said. "The county is picking up a large portion of the costs."

In drafting the budget, the commissioners considered the state's fiscal situation, the national economy, and revenue and expense pressures. While the county has seen a steep decline in investment income with interest rates at little more than 1 percent and income tax revenues have fallen quicker and lower than expected, expenses constantly grow.

More than half the budget goes to Carroll schools, but education officials have asked for $4 million more than they are allotted. The Volunteer Fire Association has requested $1.4 million more than the budget has stipulated. The sheriff proposed a new jail this week that could cost as much as $100 million.

The General Assembly passed a budget last week, but Gov. Robert L. Ehrlich Jr. has yet to accept it. If he vetoes tax increase legislation, there could be an additional $135 million in cuts statewide, Zaleski said.

"That is a question that is hanging over us," he said. "We may not have the answer even when we adopt this budget."

Zaleski painted a grim picture of state revenues. The county expects to lose at least $3.5 million in highway funds from the state. The expected $6 million state contribution to Parr's Ridge Elementary in Mount Airy has evaporated, forcing the county to pay for it in advance, as well as a South Carroll middle school. The county hopes to recoup some money from the state in the future.

"The county budget is better than we expected and it is supportive of the school system," said Susan Holt, school board president.

Unemployment and downturns in manufacturing affect the county less than other areas of the state, but Carroll could feel the ripple effects from both, Zaleski said. The possibility of state funding cuts may force changes to Carroll's budget and decreases in money for schools, libraries and other institutions.

The commissioners have scheduled five public meetings throughout the county to explain the budget. The first is at 7 p.m. Tuesday at North Carroll Middle School in Hampstead.

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