County Council OKs $1.59 billion budget

Overall property tax rate reduced by 1 1/2 cents

May 26, 2006|By JOSH MITCHELL | JOSH MITCHELL,SUN REPORTER

The Baltimore County Council adopted yesterday a $1.59 billion budget for the next fiscal year that will include a modest cut in the property tax rate.

The council unanimously adopted County Executive James T. Smith Jr.'s proposed budget with slight changes. Smith had proposed tax credits for residents on fixed incomes, but the council decided to go further and cut the overall property tax rate by 1 1/2 cents. The election-year cut will save the owner of a $200,000 home $30 a year in taxes.

"There are rising electricity and gas costs that we didn't create, but our constituents feel the brunt of it," said County Councilman Kevin Kamenetz, a Pikesville-Ruxton Democrat. "We wanted to offer some recognition that we share in that pain."

The general fund operating budget, which does not include state and federal money, calls for a 9 percent increase in county spending. The budget takes advantage of a surplus caused largely by a booming real estate market.

The council cut about $8.4 million from Smith's budget to make room for the tax cut. Most of the money came from a reserve health insurance account that council officials said would be moot because the county expects to finish the year with another big surplus.

The council also reduced the overall personnel expenses of several county agencies. Council members said the idea is not to cut positions, but to take advantage of budgeted money traditionally left over at the end of the year because of vacancies that occur.

County employees will get 3 percent raises, and spending on teacher salaries will increase overall by 5 percent.

The council also approved a $273 million spending plan on capital projects, including construction of an elementary school in eastern Baltimore County and middle school renovations. The county will set aside $50 million for employee retirement benefits that are decades away. The funding will give the county a head start on a requirement, starting next year, that local governments start accounting for long-term costs of health benefits for current workers.

"I think we're very fiscally responsible by putting in this money now," said Vincent J. Gardina, pointing out that many businesses are struggling now because they failed to set aside money for future retiree benefits.

As part of the operating budget, Smith had proposed giving $3 million in tax credits to residents who qualify for the state's homeowners property tax credit program. The council nearly halved the program, opting to combine it with a program proposed by Councilman T. Bryan McIntire, a north county Republican, and Council Chairman John A. Olszewski Sr., a Dundalk Democrat, that would have given credits solely to seniors on fixed incomes.

Under the budget approved yesterday, about $1.3 million in credits will be distributed to about 9,000 people on fixed incomes, most of them senior citizens. The credits will vary depending on household income, the person's net worth and home value.

The council lowered the tax rate -- to $1.10 per $100 of assessed value -- for the first time since 2001.

Gardina said that given the county's large tax base, a bigger tax cut was not feasible.

"It's such a broad tax base that any cut, even though it has a small impact on a homeowner, has a big impact on our budget."

josh.mitchell@baltsun.com

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