Owens promotes increase in taxes to meet shortage

$6.7 million shortfall projected next fiscal year

County Council opposes increase

Higher rates considered on income, amusement

Anne Arundel

October 21, 2003|By Ryan Davis | Ryan Davis,SUN STAFF

Anne Arundel County Executive Janet S. Owens says the county is facing a $6.7 million budget shortfall, and she has launched a public relations campaign with a message for residents: More government services will require higher taxes.

"People need to understand that there are decisions," Owens said in an interview yesterday.

Owens and her top fiscal adviser have begun publicly batting around potential tax increases. The second-term Democrat said she would consider increasing the county's income tax, the amusement tax on movies and bingo, and the parking tax for garages and lots. Owens said she also might seek authority from the state legislature to tax cellular phone use.

Budget Officer John Hammond told the County Council yesterday that the budget shortfall would hit in the fiscal year that begins July 1. And the projected shortfall doesn't include money needed to provide cost-of-living increases to county employees.

FOR THE RECORD - An article in yesterday's Anne Arundel section incorrectly reported the vote on a bill to give the County Council more control over agency staffing. The council passed the bill 6 to 1, with Democrat Bill D. Burlison of Odenton dissenting. The Sun regrets the error.

The budget hole will grow by nearly $7 million for each percentage point of a cost-of-living increase, Hammond said.

It marks the first time county officials have put numbers on next year's fiscal crunch.

County Council members immediately took aim at the idea of an income tax increase.

"You can just move on," County Council Chairwoman Cathleen M. Vitale, a Republican, told Hammond.

"Forget it," said Councilman Bill D. Burlison, a Democrat.

The county taxes income at a rate of 2.56 percent (in addition to what the state levies). The state allows the county to tax at a rate up to 3.2 percent.

Raising the tax to the maximum would generate $35 million for the county, Hammond said.

The county's operating budget in fiscal year 2005 will approach $950 million, he said.

To raise extra money, the county must turn to areas other than its largest revenue source - the property tax.

As a result of a voter referendum passed a decade ago, the amount of revenue the county collects from property taxes cannot grow from one year to the next by more than the Consumer Price Index (an inflation gauge) or 4.5 percent, whichever is lower. Revenue from new construction is excluded.

County officials will present their take on the county's fiscal situation to community associations and employee unions in the months leading up to the budget deliberation process, which begins May 1.

"I'm going to get it out there early," Owens said.

The countywide campaign follows a contentious budget process that culminated this spring when Owens laid off 18 employees, including 16 new police officers. Owens came under sharp criticism from council members and employee unions for the move.

"People have come to expect a high level of service," Owens said. "That takes training, development of employees and equipment. ... That costs money."

She added: "People are not talking to me about keeping the level of service. ... They want more."

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