March 23, 2005|By Eric Siegel | Eric Siegel,SUN STAFF
Pointing to the city's improving financial picture, Baltimore Mayor Martin O'Malley is proposing a $2.32 billion budget for the fiscal year that begins July 1 -- a 6.7 percent increase over current spending that includes raises for all municipal workers and some targeted, though small, enhancements in services.
The budget, to be presented publicly to the Board of Estimates today, includes $1.9 billion in operating funds, about a quarter of which goes for public safety, and $424 million for construction.
The plan includes the first in a series of five annual 2-cent cuts in the property tax that the mayor announced Saturday -- a reduction that would save $30 for the owner of a home assessed at $150,000 and cost the city about $5 million a year in revenues.
In several cases, the budget earmarks local funds to make up for cuts in state and federal grants.
"I'm encouraged by the budget," O'Malley said yesterday. "We've diversified our tax base, and we're seeing an increased yield in some cases.
"We're making our own way. That's what Baltimore does," he added.
Today's presentation is the first step in a three-month budget process that culminates with a vote in June by the City Council.
This year's relatively rosy budget situation is in marked contrast from that of a year ago, when the city -- after often-contentious public debate -- imposed a package of new and increased taxes on cell phones, energy and real estate transfers to balance spending and revenues without having to lay off workers or reduce services.
Those taxes are one reason why locally generated taxes are expected to increase by nearly $70 million in fiscal 2006, according to city budget officials. That's about two-thirds of the overall $108 million increase in the city's operating budget, which is up 6 percent over the current year.
More revenue
Even with the proposed tax cut, and the continuation of a 4 percent cap on the growth in residential assessments, officials expect property tax revenue to increase by $23 million, or about 4.2 percent, to $566.1 million, due largely to rising home values.
They also expect revenue from the city's income tax, which remains unchanged under the budget at 3.05 percent, to increase by $15.7 million to $191.7 million because of growth in jobs and income.
About 40 percent of the increase in locally generated revenues, or about $27 million, is budgeted for raises for city workers, including previously negotiated pay raises of 3 percent a year for police officers and firefighters, totaling about $14.5 million.
Another 34 percent, or $23 million, is set to go to increases in utilities, employee health care and other contractual services, officials said.
"This budget is about doing the business of the city," said city budget director Raymond S. Wacks.
Among the enhancements are $1.1 million for an additional 20 school nurses, to be funded through the Health Department; $1 million more for tree-trimming; and an added $500,000 to the housing department for cleaning and boarding up vacant lots and houses.
The budget anticipates an overall reduction in state and federal grants of $2.5 million, though that number could change as budgets are completed by the General Assembly and Congress.
The city is making up some of that loss out of its own funds. The budget includes an additional $1 million for the Baltimore state's attorney's office to pay for staffers whose salaries have been funded by state and federal grants that have been terminated or will be cut during the rest of the year.
Another $1.5 million is added to the budget of the Department of Recreation and Parks to make up for a cut in state Program Open Space funds.
Still, the spending plan calls for the elimination of 91 vacant federally funded positions in the Health Department and the Mayor's Office of Employment Development because of federal cutbacks.
Budget breakdown
Under the budget, the city is allocating $204 million to the public schools, which are managed independently from City Hall under a city-state partnership. That amounts to an increase of $164,500 over this year -- but it is $6.2 million, or $72 per student, more than the city is required to provide under state law.
The city's capital, or construction, budget of $424 million represents an increase of $37 million, or 9.6 percent.
Declines of $24 million in state and federal capital grants -- due not to cutbacks but to the completion of major road and wastewater projects, officials said -- are more than offset by increases of $51 million in city bonds and $16 million in state motor vehicle funds.
More than half of the capital budget -- $218 million -- is for water and wastewater projects, part of a long-term program to comply with a federal consent decree to cut pollution from the city's sewer system.
About $90 million of the money is to fund transportation projects; $69 million is for community and economic development; and $19 million is for school construction.
