City may borrow to fund tax cut

Panel suggests using $800,000 set aside for City Dock work

May 10, 2006|By NIA-MALIKA HENDERSON | NIA-MALIKA HENDERSON,SUN REPORTER

In a move that Mayor Ellen O. Moyer called unwise, the Annapolis city council is aiming to cut the property tax rate by spending $800,000 set aside to repair and upgrade City Dock.

The Finance Committee, made up of three aldermen, recommended Monday night a 3-cent rate reduction, to 53 cents per $100 of assessed value. Moyer's proposed $68.6 million budget leaves the property tax rate unchanged.

Aldermen Joshua Cohen and David Cordle and Alderwoman Classie Gillis Hoyle suggested stripping $800,000 from the $1.7 million project to replace the bulkheads and boardwalk and install utility lines. The money, gleaned from annual boat show revenue, would go to the city's operating budget. The city would have to borrow to make up the $800,000.

Cohen, an Eastport Democrat who represents Ward 8, said the savings would provide "modest relief" to taxpayers faced with rising gas and electric costs.

"We all wanted to cut the property tax rate, and that required making significant cuts," Cohen said. "Going in, I didn't think we could achieve both goals, but we came up with some good recommendations."

He added, "Given the fact that the bulkhead project will benefit citizens for years to come, we thought it made more sense to pay for it through issuing bonds rather than paying for it all at once."

With the proposed 3-cent reduction, the owner of a home assessed at $300,000 would pay $1,590 in city property taxes. At Moyer's proposed tax rate, that homeowner would pay $1,680.

Rising assessments - up an average 27 percent this year in the city - will mean that homeowners can still expect to see increased tax bills.

Assessment increases for tax purposes are capped in the city at 10 percent a year, the state maximum, so the owner of a $300,000 home could pay taxes on $330,000, or $1,848 at Moyer's proposed rate. At the city council's proposed rate, the homeowner would pay $1,749.

Moyer said that increased fuel costs and overdue capital improvements prevented a rollback in property tax rates. Continued borrowing could be detrimental in the long run, she warned.

"We had a very tight budget, and they have found ways to reduce the property tax rate," Moyer said. "But the way they have done it is to put the city on a credit card, and I don't think that is very good fiscal policy."

The council is expected to vote to approve a budget at its May 22 meeting. The fiscal year begins July 1.

"We had the participation of every member of the council," said Hoyle, a Ward 3 Democrat. "We have the number of votes, and I'm certain it will get it passed."

Alderman Sam Shropshire of Ward 7 said he wanted to see a council budget that funded nonprofit groups more fully.

"I don't know that anybody is satisfied. Everybody has had pet projects hit," Shropshire said. "We've all lost quite a bit, but it's done. We're all equally happy or equally miserable."

nia.henderson@baltsun.com

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