Council, affected groups unhappy with O'Malley's new tax proposal

City officials vow to find budget fix without home, energy, cell phone fees

April 27, 2004|By Laura Vozzella and Doug Donovan | Laura Vozzella and Doug Donovan,SUN STAFF

As Mayor Martin O'Malley lobbied Baltimore ministers and real estate agents to back his $40 million tax plan yesterday, City Council members suggested it would be a tough sell, even within City Hall.

"We're not going to roll over and play dead," Council President Sheila Dixon said, vowing to look for other ways to plug a $40 million gap in the proposed $2.1 billion budget for the fiscal year starting July 1.

O'Malley, whose three revenue bills were introduced at last night's council meeting, wants to increase or impose new taxes on cell phones, energy and real estate purchases to put the next city budget in the black.

"We can come up with alternatives," said Councilman Keiffer J. Mitchell Jr. "We don't have to accept what the administration gives us."

O'Malley's plan calls for a 4 percent tax on utility bills paid by residents, churches, manufacturers and nonprofit organizations, and state and federal office buildings. It also seeks a $3.50 monthly telecommunications levy, which would tax for the first time cell phones and pagers as well as conventional phones. And it would almost double recording taxes imposed on real estate sales to 1 percent of the purchase price, up from 0.55 percent.

Without new and increased taxes, the city would have to cut more than 500 city jobs -126 of them police officers - reduce trash collection, eliminate recycling and cut back fire protection, O'Malley has said.

The council will hold hearings on the budget next month and is expected to approve a spending plan by June.

O'Malley tried to sell the tax proposals in a breakfast speech yesterdayto the Greater Baltimore Board of Realtors at the Baltimore Zoo. That group was most concerned about his intention to raise the real estate recording tax. The tax on a $100,000 home would rise from $550 to $1,000 under the proposed rate.

"After two years of holding the line, we are going to have to put in a revenue package to the City Council," said O'Malley, who blamed the need for revenues on cuts in federal and state aid.

Tax increases are needed "for life-and-death stuff that keeps our city going," such as police and fire protection, he said.

But members of the real estate group said the measure could reduce home sales.

"We have a momentum of bringing homeowners into the city," said Cindy Ariosa, president of the Realtors organization. "We would hate to see the momentum die down."

Janice Blackwell-West, a Realtor for Century 21, said such an increase would financially burden low-income buyers of modestly priced homes.

"That's a lot of money for poor people," she said. "It's a whole lot of money when you're counting pennies at settlement."

O'Malley met later at City Hall with nearly 50 Christian, Jewish and Muslim leaders to explain his proposal to impose the 4 percent energy tax. Other city companies already pay an 8 percent energy tax.

"We, as a religious institution, will have to think creatively about what we can do to manage this 4 percent tax," said Rabbi Mona Decker of Bolton Street Synagogue, who attended the meeting. "We can't absorb this kind of expense. It means we will have to pass it on to our parishioners."

O'Malley's proposed cell phone tax led the wireless industry to mount an offensive of its own, sending representatives to City Hall yesterday to try to arrange meetings.

"This is not the way to encourage businesses to locate in the city when wireless expenses increase," said John H. Johnson, spokesman for Verizon wireless.

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