After months of rancorous debate, the search for a solution to Baltimore's $121 million deficit draws to a close this week without the sweeping layoffs or deep service cuts that officials had threatened.
But analysts are warning of the potential impact of a little-remarked hike in the income tax, and of more tough fiscal times ahead, as federal stimulus funding dries up and the state tightens its belt.
A budget represents a "snapshot of the next year," not a "strategic plan," said Donald Fry, head of the Greater Baltimore Committee. He said officials should seize the lull after the budget's passage to draft a long-term roadmap for economic development.
Economist Anirban Basu, CEO of the Sage Policy Group, sounded a note of alarm over an increase in the income tax, which nearly doubles the disparity between rate in the city and that of Baltimore County.
"I've never seen such a stealth income tax increase in my life," said Basu, who warned that the hike could dissuade those considering a move to the city or prompt residents to leave.
"The city took two steps back when it only needed to take one step back," he said.
The city's financial situation remains far from ideal. Officials will pull $50 million from the rainy day fund to plug a hole from the current fiscal year — the first time that fund has been tapped. On Thursday, it appears at least 50 city workers will lose their jobs, although officials are trying to move as many as possible into other positions. And despite a host of new or increased taxes, there is no guarantee that the city will be in a better position as the next budget season begins.
But for now, as city officials catch their breath — and inspect the scars from a protracted budget battle — there is a palpable sense of relief.
Some services, such as tree cutting, will be reduced, taxes will creep upward and at least several dozen city workers will be out of work. But there will be few dramatic changes when the new fiscal year begins Thursday.
So ends the first major political test for the new mayor and city council president — a process that turned out to be anything but a dry exercise in arithmetic.
At least once a week, demonstrators for one cause or another have stormed City Hall to beg officials to save programs on the chopping block or to protest new taxes. Mayor Stephanie Rawlings-Blake and the City Council have skirmished, most notably over the creation of a new tariff on bottled drinks, and council meetings have become gasp-inducing spectacles as the city's legislators begged openly for each other's support, and cast surprise votes after last-minute changes of heart.
Ultimately, Rawlings-Blake, Council President Bernard C. "Jack" Young — both of whom took office in February — and the rest of the council managed to balance the budget without drastically cutting services or raising property taxes.
"I'm certainly pleased that I was able to work with the council to make it clear to them the expected revenue and the shortfalls and what I believed was necessary to keep the city moving forward," said Rawlings-Blake.
The mayor, who was sworn in after Sheila Dixon resigned in February as part of a plea deal in her criminal trial on charges of perjury and embezzlement, inherited the hefty deficit, as well as a police and fire pension crisis, from her predecessor.
About a month into her administration, Rawlings-Blake briefed council members on a raft of drastic trims to essential services she said would be necessary if the city could not find new revenue. In the doomsday budget, hundreds of police officers would lose their jobs, several neighborhood fire companies would cease operation and more than half the city's pools and recreation centers would turn away children and shut down for good.
City budget director Andrew Kleine said it was necessary to propose cuts to key services to prevent the budgets of other departments from being decimated. But some council members criticized the doomsday budget as a manipulative move to garner support for Rawlings-Blake's $50 million collection of new taxes.
The warnings of massive layoffs alarmed residents and city workers alike. Councilman James B. Kraft said they "hurt [Rawlings-Blake's] credibility with a lot of citizens."
"I believe people are more intelligent than that," he said, adding that he thought the mayor could have drawn support for the taxes without suggesting slashing essential services.
When Rawlings-Blake unveiled the revenue package, which included increases to energy, telecommunications, parking and income taxes, she asked the council to expedite two of the tariffs: the bottle tax and an annual excise tax on hospital and university beds.
Those taxes were estimated to bring in the most revenue — and they met with the strongest opposition.
