Relying on a surge in property and income tax revenue to offset losses from a sliding economy, Baltimore Mayor Sheila Dixon proposed a modest budget yesterday with a small property tax cut and no increase in other levies.
Predicting tougher times ahead, Dixon proposed a $2.92 billion budget, about 10.4 percent more than last year. The plan includes nominal increases for police, fire and schools but also cuts to parks and health programs and the elimination of 95 vacant positions.
The spending plan, which must be approved by the City Council, continues for the fourth straight year the city's practice of reducing its property tax rate by 2 cents annually, though many residents will still pay more because of rising assessments.
City budget officials warned that the economic outlook is bleak. Two key real estate taxes are expected to fall off by about 30 percent.
"This budget is both responsible and responsive to the needs of the city and to the citizens," Dixon said. "Because we've budgeted carefully in the past years, we're prepared for the slowdown."
The overall increase in spending includes a 31 percent jump in the capital budget, which is mostly funded with grants and loans. The general fund -- where most local tax revenue is directed -- would increase by 4.8 percent over last year to $1.3 billion.
The city expects to receive a $52.2 million increase in property taxes -- a 9.9 percent bump -- largely because of higher assessments in neighborhoods such as Hampden, Guilford and Ednor Gardens. The increase may underscore calls for property tax relief.
Dana Moore, president of the Charles Village Civic Association, said about 50 people regularly turn out at community meetings. But when property taxes went on the agenda for a recent meeting, attendance jumped to 150.
"It's a big issue," said Moore, adding that opinions vary on whether the taxes are worth it.
Dixon convened a panel on property taxes last year that made several controversial recommendations, including lifting a cap that limits assessments and raising other taxes in exchange for reducing the property tax. None of those recommendations has advanced.
The 2-cent reduction in the property tax rate -- from $2.268 to $2.248 per $100 of assessed value -- would translate into an annual savings of $60 on a $300,000 home. To hold homeowners harmless for the rising assessments, the city would have to cut the rate by nearly 17 cents more.
Income taxes are expected to bring in $263.7 million, up 11.4 percent over what was budgeted last year.
The budget calls for spending 4.5 percent more from the general fund for the Police Department, mostly for negotiated salary increases, but also for a $662,000 increase for vehicle maintenance and a $441,000 increase for emergency communications.
Spending on city school operations would increase by one-tenth of 1 percent, to $204.7 million. The budget includes $600,000 in new money for the homeless, $4.2 million for affordable housing and $2.3 million for summer jobs for youth.
The administration also anticipates spending $877,400 on Pimlico Middle School, which is being renovated for reuse as a police and fire training academy.
The budget would cut $320,000 from an HIV screening program and $110,000 from the city's needle-exchange program. The parks department would face $224,000 in cuts.
The City Council is expected to negotiate for more money for youth programs, such as Experience Corps and after-school initiatives. Dixon has supported those programs in the past.
"This is crucial to the city of Baltimore," said City Councilwoman Mary Pat Clarke, adding that it is important "in this time of tightening our belts we don't forget the most important thing, which is our children."
The proposed budget will run from July 1 through June 30, 2009. The City Council will begin holding hearings in April and must approve the budget in June.
The public will have an opportunity to be heard on the proposed fiscal 2009 budget at 6 p.m. April 3 at the War Memorial Building. The budget plan is available on the Internet at www.baltimorecity.gov/government/finance/