Dixon asks for rise in spending

Slight cut in property tax rate, more recreation, housing funds

March 22, 2007|By John Fritze | John Fritze,Sun reporter

As a cooling real-estate market continues to be a drag on city finances, Baltimore Mayor Sheila Dixon's administration proposed a $2.65 billion spending plan yesterday that calls for a slight property tax cut and increased spending for recreation centers, the cleanup of vacant property and affordable housing.

Spending would increase by nearly 11 percent in the fiscal year that begins July 1, though that increase is largely driven by $160 million in state environmental grants - including money from Maryland's "flush tax" - the city will use to rebuild sewage treatment plants that currently permit tons of pollution to flow into the Chesapeake Bay every year.

Operational spending - police salaries and park maintenance, for example - would increase by 4 percent, less than the 6.1 percent increase proposed last year by then-Mayor Martin O'Malley, Dixon's predecessor and now governor.

The budget, which will be considered by the City Council this spring, will almost certainly become a political issue this year as Dixon and other city officials seek re-election.

"Real-estate growth is good. It's not as great as it was," said Dixon, referring to past years in which property and transfer taxes, bolstered by the housing market, lifted city budgets and produced record surpluses. "The city has put together a budget to maintain basic services and make some critical improvements," she said.

Dixon's proposed budget continues a commitment made by O'Malley in 2005 to reduce the property tax rate by 2 cents annually for five years. In July, the property tax rate will decrease from $2.288 to $2.268 per $100 of assessed value - a $70 savings for the owner of a home valued at $350,000 for tax purposes.

Still, most residents and business owners will pay more in property taxes because the assessed value of property has increased faster than the rate has declined. If the city set a tax rate that fully compensated for those increased assessments - what is known as the constant yield rate - the property tax rate would drop by 13 cents.

Setting the tax rate became a major issue in the City Council last year, and all indications are it will be a focus of debate again this year. The lead proponent of property tax reduction, City Councilman Keiffer J. Mitchell Jr., is running for mayor against Dixon in the Sept. 11 Democratic primary. Dixon, meanwhile, created a task force she said will study long-term tax solutions.

In addition to property taxes, sewer and water bills are also expected to rise by nearly 30 percent over the next three years. Money collected from those fees will be used to pay for improvements to the sewer system.

City Council President Stephanie C. Rawlings-Blake, who must direct the proposed budget through the council hearing process, said she believes the spending plan is solid, especially given the slowdown in the real-estate market. Property tax revenue is expected to inch up more than 5 percent over last year, and income tax revenue is estimated to increase about 10 percent.

"I thought that we were going to take a real hit," Rawlings-Blake said. "I still see growth in the city. I'm confident that with a keen awareness of the priorities of our city and our constituents, the budget process will be smooth."

Dixon's budget allocates $346.3 million for police operations, a 4.4 percent increase over this year - much of which would cover negotiated salary and benefit increases. The administration would set aside an additional $732,600 for police overtime next year, significantly less than the department typically spends.

City schools, meanwhile, would receive $208.1 million for operations, an increase of less than one-tenth of 1 percent.

Nearly $1 million would be spent to hire 23 new recreation center staff members and $4.2 million would be directed toward the city's affordable housing fund, which is used to develop homes for low- and middle-income residents. The budget calls for a $235,000 increase in funding for the Maryland Zoo in Baltimore, for a total of $600,000, and about $700,000 in additional funding to clean and board-up vacant properties.

Among the most significant changes is a $160 million increase that would be used to rebuild the Patapsco Wastewater Treatment Plant, about $120 million of which will come from the Chesapeake Bay Restoration Act. The fund, known as the flush tax, was created by former Gov. Robert L. Ehrlich Jr. Most homeowners pay $30 a year into the fund.

The program's goal is to upgrade the state's 66 largest wastewater treatment plants to reduce the amount of nitrogen and phosphorus found in treated sewage. The pollution causes low-oxygen "dead zones" in the bay.

john.fritze@baltsun.com

highlights

Here are some highlights from Baltimore Mayor Sheila Dixon's proposed budget for fiscal year 2008:

Baltimore estimates it would collect $1.3 billion in taxes, including property tax, local income tax and recordation fees. That represents about a 6.6 percent increase over the current year's tax revenue.

The budget includes $346.3 million for police operations, about a 4.4 percent increase over the current year (much of the new money will be used to pay for negotiated salary and benefit increases). Schools would receive $208.1 million for operations, an amount virtually even with this year's.

Officials will use about $160 million in state funds, including money from Maryland's "flush tax," to begin modernizing its sewage treatment system.

[ Source: Mayor's Office]

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