Spending priorities focus of debate

Guzzone wants portion of income tax boost for school construction

Howard County

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

Howard County Council Chairman Guy Guzzone pressed Robey administration budget officials yesterday to spend a big chunk of cash from the county's income tax increase on school construction next year - raising the stakes for what is estimated to be a diminished pot of new revenue.

With county teachers expecting a 6 percent pay raise they negotiated two years ago - a $24 million expense - and revenue predicted to be as much as $20 million below original estimates, Raymond S. Wacks, the county budget director, told Guzzone, a North Laurel-Savage Democrat, that his request "will be a difficult balancing act in the spring."

But Guzzone said getting cash for school construction is "one of the reasons I finally agreed to last year's increase." Although revenue collections are projected to be lower than expected next year, he said, he still wants a percentage of the money to pay for more new classrooms - even if the county's state legislators approve new taxes for that same purpose.

"Even with the $30 million [a state tax increase would leverage], it's not enough," Guzzone said. If Howard sells a record $80 million in bonds and gets $30 million from a transfer tax increase, that's still less than the $115 million requested by the school board, plus any general county construction costs, he said after the council's monthly administrative meeting in Ellicott City.

He did not criticize the teachers' pay raise, noting it was part of a three-year contract that offered no increase the first year, a 4 percent raise this year and 6 percent next year - a 3.3 percent annual average. No one could predict two years ago that the county would be facing such tough fiscal times now. "That is the danger of doing multiyear contracts," Guzzone said.

County Executive James N. Robey said the situation "creates a heck of a challenge," though his goal, too, for the tax increase was to raise more funds for capital expenses, including school construction. "That's still my desire," he said.

Wacks told the council that because of lagging income tax revenue, the county would have had to resort to layoffs without the 30 percent income tax increase, which takes effect Jan. 1. "We are looking at barely squeezing by," he said.

Raquel Sanudo, county chief administrative officer, noted that layoffs and furloughs were required during the recession in 1991.

The comments prompted protest from Councilman Allan H. Kittleman, who said the county could spend less money. Kittleman, a western county Republican, voted against the county budget last spring. "If we had not increased the budget so much," he said, the squeeze wouldn't be so severe now.

But Kittleman, too, said he would like to see some of the income tax revenue spent on school construction "if we have enough money." A decision on whether to pay the teachers their full 6 percent pay raise is "something the school board has to decide," he said.

Councilmen David A. Rakes and Ken Ulman, both Columbia Democrats who backed the income tax increase, said they strongly support pay raises for teachers. Councilman Christopher J. Merdon, an Ellicott City Republican, did not attend the meeting, but he said later that it is too early in the budget process to decide specific spending priorities. If money is available to pay for school construction, "I certainly support that," he said.

Wacks and Sharon Greisz, the county finance director, said the lowered income tax revenue estimates mean that the county will collect $22.8 million less than expected this fiscal year.

They gave council members a detailed list of compensating budget cuts that Robey announced, adding that it will also take several more years to get the nearly $3 million needed to bring the county's Rainy Day Fund to a full 7 percent of spending.

They also told the council that the hot real estate market produced a $3.5 million bonus in real estate recordation taxes in the fiscal year that ended June 30. But that was dwarfed by the failure of income tax revenue to meet expectations.

Because the tax increase begins Jan. 1 - the middle of the fiscal year - the county will receive only a partial boost from it. Instead of $60 million more in income tax revenue expected overall in the year starting July 1, estimates are that the increase could be closer to $40 million.

Wacks said the lower revenue was a delayed reaction from the stock market and capital gains income declines of the past several years.

"We got that impact a year later than we thought," Wacks said.

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