Cecil says increase in taxes is possibility

Retired teacher benefits may be part of state cuts

April 25, 2004|By Ted Shelsby | Ted Shelsby,SUN STAFF

ELKTON - The taxman could be taking a bigger bite out of the paychecks of Cecil County residents next year if the state stands by its threat to pass the cost of retirement payments for teachers on to the counties.

"We would have no choice but to raise taxes," said Nelson K. Bolender, president of the Cecil County Board of Commissioners.

He said Cecil stands to lose about $6.5 million in state funds. "That's a lot of money for this county. I don't see how we could avoid raising taxes," he said.

State leaders failed to reach an agreement on slots or other new revenue sources to address an anticipated $830 million deficit next year during the General Assembly session that ended this month.

As a result, Gov. Robert L. Ehrlich Jr. said he would balance his budget for the fiscal year beginning July 1, 2005, with deep cuts.

One of the cuts most frequently talked about is about $400 million the state provides to the counties to pay the retirement benefits of teachers and library workers.

Cecil's loss of state funding compares with an estimated cut of $55 million to $60 million for Baltimore County and about $18 million for Harford.

Alfred C. Wein Jr., Cecil's county administrator, said the loss of state funds would be hard for Cecil because its budget is about $110 million.

"It's a significant amount of money for us, that's for sure," Wein said.

While the county has not decided how it will raise the money, Wein said it could amount to about a 12-cent increase in the property tax rate.

Residents currently pay 98 cents per $100 assessed value of their homes.

Budget manager Craig Whiteford said the average county property tax bill is $1,369 a year. He said that figure includes residential units and unimproved property as well as business and commercial properties.

Wein said the county also has some flexibility to increase the income tax. He said the current piggyback tax rate is 2.8 percent, meaning that citizens pay 2.8 percent of whatever their state income tax would be to the county.

"We have the authority to increase the piggyback rate to 3.2 percent," Wein said.

He said the county also could raise the recordation tax paid on real estate transactions.

Cecil County stood to benefit significantly from the governor's slots proposal, according to Bolender.

The bill that died in the legislature would have allowed for a casino-style slots palace near Perryville.

"The county would have gotten $10 million a year," Bolender said.

But the commissioners sent mixed messages to Annapolis concerning gambling in the county. The commissioners voted 3-2 in favor of slots during a meeting with the county's legislative delegation last month, but reversed that decision earlier this month when they voted 3-2 to oppose slots.

The commissioners still have time to contemplate action to fill the loss of state funding. Wein said the commissioners would start looking at revenue estimates in late December or early January. The departments of the county government are to submit budget requests by Feb. 1.

"We should have a better feel for the situation at that time," he said.

Harford County Executive James M. Harkins said earlier this month that Harford needed to begin preparing for what he called "an $18 million hit" from the state. However, he said it was too soon to say what steps might be taken, including the possibility of layoffs.

He said there were no plans to increase taxes, but that such a move could not be ruled out.

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