Hearing illustrates Baltimore's reversal of fortunes

Urban Chronicle

May 18, 2006|By ERIC SIEGEL

The room was filled with people arguing passionately for more money for social programs - and a couple of voices calling for even greater reductions in property taxes.

It may at first seem to be somewhat counterintuitive, but the annual City Council Taxpayers' Night held this week at War Memorial Building was another indication of the city's improving fortunes - and the important debate over what to do with additional resources.

Not so long ago, circa the 1990s, Taxpayers' Nights that preceded the council's consideration of the budget were also dominated by similar pleas for more money for programs and tax relief - both with an important difference.

Back then, the clamor was for more funds to prevent cuts in government-funded programs and facilities - principally libraries and recreation centers.

Funding increases

This year, the budget proposed by Mayor Martin O'Malley for the fiscal year that begins July 1 includes increases of $2.6 million for the Enoch Pratt Free Library system and $2 million for Department of Recreation and Parks.

And the calls for decreases in property taxes were made as part of a strategy to stem the net exodus of people from the city.

At Monday night's hearing, the request by advocates of Baltimore's Safe & Sound Campaign for an additional $5.4 million in city funds - for its "opportunity agenda" to give city kids a chance for a better life - was made to expand existing after-school and readiness activities or make up for expiring private grants for programs that serve pregnant women and families in several poor neighborhoods.

And the calls by members of The Baltimore TEA (Taxes, Education, Action) for greater property tax relief than the 2-cent-a-year reduction over five years that the city began last year were made because of the burden of rising assessments caused by the increased attractiveness of many city neighborhoods.

The impressions of improving city fortunes underlying Taxpayers' Night are confirmed in the city's budget documents.

You can take issue with the city's crime numbers, as some have done, but it's harder to quarrel with the financial figures.

Put aside real estate transfer and recordation taxes, the source of most of the $60 million surplus in this year's budget. Property tax revenue, flat for the latter half of the 1990s, is projected to be $592 million in the next fiscal year - up 6.5 percent over the current budget and 25 percent since the start of the decade.

The increase in income tax revenue is even more impressive. It's projected to be $215 million - an increase of 12.1 percent over the current budget and a hefty 40 percent over the 2000 budget.

Equally impressive is some of the Finance Department's explanation for the increase.

`Important changes'

"Baltimore is experiencing some important changes in demographics and housing which it is believed affect positively trends in income tax receipts," budget officials write. "In the most recently completed tax year (tax year 2004) the number of high income taxpayers in the city and state grew at similar rates," about 17 percent.

Hathaway Ferebee, executive director of the Safe & Sound Campaign, said her group's agenda of investing in programs to benefit children makes sense in any economic environment but is even more logical when finances are flush.

"It's irresponsible - particularly when there's a budget surplus and you don't have to take the money from somewhere else - to not invest the money," she said yesterday. "I don't know how you can say `no' to that."

The city is hardly tone-deaf to the issue. The proposed budget contains a section titled "Children's Budget Expenditures," pointing out that city funding of programs specifically for children has increased by nearly $50 million over the last two years.

Still, it's hard to argue with Ferebee's basic point that more funding is needed. While the city's economic health has improved over the last several years, the number of children living in poverty in the city grew from about 35,000 in 1999 to nearly 42,000 in 2003, the last year for which figures are available, according to the U.S. Census Bureau. In all, more than a quarter of kids below age 18 live in poverty in the city, the census bureau says.

At the same time, it's hard to ignore the fact that the city still has far and away the highest property tax rate in the state - and it's difficult not to empathize with some homeowners, particularly seniors, who see their tax bills rising along with their assessments, the 4 percent annual cap on taxes notwithstanding.

Still many needs

And what of the need to provide more decent, affordable housing? Or to enhance public safety or invest in the kind of redevelopment that can lead to more growth and prosperity in the future?

Although the city's finances are improving, there's still not nearly enough money to address all of the needs, all at once.

It makes for a different, less painful - but not necessarily easier - debate than in the shrinking and stagnating days of the not-so-distant past. And it's something that's likely to dominate city budget discussions for several years to come.

eric.siegel@baltsun.com

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