Level budget still in reach

Unavailable car-rental tax not needed, county executive says

March 28, 2007|By Phillip McGowan | Phillip McGowan,sun reporter

Although state lawmakers are unwilling to grant Anne Arundel County the authority to impose a car-rental tax, County Executive John R. Leopold said yesterday that decision will not greatly affect the budget he will propose in five weeks.

Leopold said he can balance the $1.1 billion budget through cost-cutting and proposed increases to developer impact fees and the commercial-bingo tax. The car-rental tax could have raised up to $5 million annually, Leopold said.

While Anne Arundel faces significant budget challenges, two vital revenue sources appear to be holding up. The government is expected to net at least $105 million in real estate taxes for fiscal 2007 - which is in line with projections from the county budget office, according to Charles Mannion, an analyst for the county auditor. He said that figure could rise by $2 million.

Also, Mannion estimated that the county could surpass the projected $345.5 million in income tax revenue by $3 million to $5 million.

"The dire revenue problem is next year, not this year," he said.

County Councilman Edward R. Reilly, a Crofton Republican, said, "I am confident that Mr. Leopold will be able to balance the budget and service the needs of the county." Alluding to the school board's $920 million budget, Reilly said, "I don't agree that every part of government has been squeezed as hard as it can be."

Still, County Council Chairman Ronald C. Dillon Jr., a Pasadena Republican, was displeased with the decision of state lawmakers last week to indefinitely postpone consideration of the car-rental tax. "It's a clear message that the delegates and the senators of the county would rather have resident taxpayers bear the entire burden of a tax increase than spread that out also among those visiting our county," he said.

The decision was a victory for state transportation officials, who argued that it would hurt the "low-cost" reputation of BWI Marshall Airport and would dampen economic development in the county.

"We were [not] and are not in favor of that tax," said Timothy L. Campbell, executive director of the Maryland Aviation Administration. "If the bill does die, it would be fine with us."

The county's senators voted last week to approve a measure for a joint county-state task force to weigh various revenue ideas. The Anne Arundel delegates voted down a study to consider the feasibility of a rental-car tax.

Leopold, a Republican, along with all seven council members, supported the initiative to grant the county the power to impose a rental-car tax, even as some of the council were skeptical about using it.

The county executive said he would consider imposing such a tax if all efforts to find efficiencies were exhausted and necessary services could not be maintained without added revenue. Anne Arundel government is facing as much as $200 million annually in added operating expenses from 10 union contracts, a soaring education budget, rising health care retiree costs for county workers and infrastructure improvements to prepare for a military expansion at Fort Meade.

Some state lawmakers said they were against authorizing new taxes in any form, even though the County Council also needed to approve a car-rental tax. Others were concerned about giving the county additional taxing authority that might not be needed.

"I don't like to give something to somebody if they aren't sure it's absolutely needed," said Democratic Del. Mary Ann Love, chairwoman of the county's House delegation. "If [Leopold] had proven it was needed and had sat down with us and made his case, we maybe would have considered it.

"But just to give money away, just in case. We don't like the `just in case.' I think it's a dangerous precedent."

Leopold said the state lawmakers' reaction indicates "how reluctant they are to discuss any tax increase whatsoever" in the tax-averse environment of Anne Arundel County, even in the context of a car-rental levy that would mostly affect out-of-state residents.

Leopold called it "irresponsible not to prepare for the possibility of additional revenue to fund essential services." He added: "It's shortsighted to not plan prudently."

Leopold said that within the next year state leaders will likely propose a series of tax increases to cover a $1.4 billion structural deficit.

He said he wondered what legislators who are "skittish about how they will vote on taxes" will do if asked to approve measures that will "directly impact their residents."


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