Maxwell seeks tax boost

Higher income levy to help cash-strapped schools proposed

January 14, 2007|By Ruma Kumar and Phillip McGowan | Ruma Kumar and Phillip McGowan,[Sun Reporters]

Anne Arundel County school officials -- hoping for a $131 million boost in school funding -- are pressing the county executive and County Council to raise a local income tax that hasn't been touched since Lyndon B. Johnson was president.

Undaunted by the long shot, schools Superintendent Kevin Maxwell is pushing for the tax increase because it could generate $80 million for the cash-strapped school system and county.

Maxwell said last week that he hopes the council will consider raising the county's local income tax rate from 2.5 to 3.2 percent, the legal limit. Such an increase would mean that a taxpayer who earns $50,000 a year would pay $350 more in local income tax annually.

Counties have the authority to raise the "piggyback" tax (so called because it is added to the state income tax) without going through the state legislature, and Maxwell noticed that Anne Arundel, unlike neighboring counties such as Howard and Prince George's, hadn't raised its local income tax to the maximum.

"It's a quick way to get money," Maxwell said.

The schools chief has a tough sell ahead of him. He faces a newly elected county executive who ran on a no-new-taxes plank, a Republican-majority County Council that hasn't raised taxes in seven years and a county government that is grappling with budget pressures this year.

County officials, who are limited by county law in what they can collect in new residential tax revenues, also must find money to cover rising retiree health care costs and negotiate 10 labor contracts.

"It's going to be a tough year; we're getting hit from every angle," said County Councilman Ronald C. Dillon Jr., a Republican. "Plus, it's no secret that Anne Arundel county is a very tax-averse county and one where the citizens frankly don't have all that much faith in government."

County Council members aren't the only ones bristling at the school system's budget request.

Victor Bernson, a fiscal conservative recently appointed to the school board by Gov. Robert L. Ehrlich Jr., said he wants Maxwell and his colleagues on the board to rein in spending before forwarding the budget to the council this spring.

"We're only operating on one side of the economic ledger here, and that's spend, spend, spend," Bernson said. "The unspoken but self-evident goal of this budget and those who support it is to raise taxes. It's too easy to ask for moon and stars, say it's all for the children and then force the county executive and the County Council to be the bad guys."

County Executive John R. Leopold and Maxwell said they have discussed the school budget but haven't talked about how they would pay for it.

"I've done everything in my power and will continue to do everything in my power to find efficiencies," said Leopold, a Republican who estimated that his restructuring has saved the county close to $1.5 million. "I encourage the superintendent and the school board to do the same thing."

With thousands of defense jobs expected to arrive during the next four years at Fort Meade, Leopold said county schools will serve as incubators for the next generation of scientists, engineers and linguists to fill work-force needs in the area.

"I want to work with them to achieve that excellence to accomplish those goals within the parameters of fiscal responsibility," he said.

The county executive said he will not make any decisions until he completes "a thorough examination" of the budget, the results of which he will present in May.

Privately, some county officials estimate that the cost of addressing retiree health care costs, labor contracts and other initiatives could add $200 million a year to the $1.1 billion operating budget, about half of which goes to the school system.

Budget analysts estimated last year that real estate tax revenue -- which has been a boon for county -- could decline $15 million this year. And with the state facing a $400 million shortfall, increased state funding is far from a sure thing.

Leopold's predecessor, Janet S. Owens, said last year that the next county executive might have to raise income taxes to keep up with rising expenses. The current income tax rate is the lowest in the Baltimore area and the third-lowest in the state.

Maxwell stressed another reason for possibly raising taxes: Although student performance looks all right for now, about 40 schools barely met reading and math benchmarks under the federal No Child Left Behind law and could face state takeover.

"In some of those schools, we made it by one, two or three students," Maxwell said. "We're at the tipping point here. We can go either way. If those schools hadn't made it, we would have a dramatically different picture."

The sweeping federal law imposes sanctions on schools that don't meet reading and math performance targets. As standards grow more strenuous, Maxwell said, he is bracing himself for the possibility that nearly a third of Anne Arundel County schools might not pass muster next year.

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