Annapolis council members want cuts to city budget

Spending increase viewed as tough sell after borrowing, credit rating issues

March 15, 2011|By Nicole Fuller, The Baltimore Sun

Annapolis Mayor Joshua J. Cohen's proposed budget may require deep cuts to pass the City Council, with some members warning Tuesday that the 8 percent spending increase envisioned in the plan is untenable.

The mayor's $86.2 million plan for next fiscal year also includes a variety of fee increases intended to shore up the city's depleted cash reserves. The council saw the proposal for the first time at Monday's meeting, and must approve a spending plan by June.

"It's outrageously high," said Alderman Frederick M. Paone, the council's lone Republican. "A lot of cuts are going to have to occur."

Alderman Ross H. Arnett III, said he was "stunned" at the mayor's proposal and would be "looking aggressively" for places to cut. He cited last year's budget, which decreased spending by about 13 percent, as a barometer of where the council will head.

"I guess we didn't really learn anything," said Arnett, a Democrat. "I guess it was just a one-year lapse where we became fiscally responsible."

Cohen countered that the proposal represents a balanced budget that includes his priorities of improvements to infrastructure, along with substantial increases to the city's heavily depleted reserves. The push to replenish the city's fund balances will result in a nearly $10 million general fund balance in fiscal year 2012 — up from $4.1 million in the current fiscal year.

The proposed fee increases will also help shore up the reserves because several of the services have been running at a deficit and have relied on funding from the city's general fund. Raising the fees, Cohen said, allows the services to pay for themselves.

"It may not be popular politically," said Cohen, who added that he could envision the council phasing in some of the fee changes." But we wanted to look clearly at what are long-term liabilities are."

Cohen proposed spending increases in several areas he identified as budget priorities, including increased recycling, enhanced storm water remediation and stream restoration. The mayor has also budgeted money to revamp the city's transportation infrastructure through improved parking facilities, a new downtown shuttle and an increased focus on economic development. The transportation plan would require about $450,000 to be put aside for the city's newly created economic development corporation.

The mayor is also seeking fee increases for water and sewer management, the cost of a bus fare, and the institution of a controversial sidewalk fee. Legislation that created a $25 annual fee charged to city residents for sidewalk maintenance was overturned in 2008 amid heavy opposition.

The mayor also introduced a $9.3 million capital budget, which includes $300,000 in funding to create a vehicle replacement program to maintain the city's fleet. Additionally, the mayor plans to increase the amount of community grant funding by $45,000 — following previous cuts to the grant program by 50 percent.

Because of a lack of cash flow due to low reserves, the city has twice borrowed and repaid $10 million in the past year. Two of the three major bond rating agencies are downgrading the city this month, with Moody's moving the city down two notches on its rating scale, and giving it a "negative outlook."

Joe Budge, vice president of the Ward One Residents' Association, said Tuesday he was open to discussion of fee increases, but the mayor should also keep in mind the potential hardship that such fees could place upon residents already struggling financially.

"I appreciate the fiscal hardships the city's been through, but we need to take a good hard look at what's feasible," said Budge. "The economy's tough and no one wants to see an increase in payments to the government."

Alderwoman Sheila M. Finlayson, a Democrat, said while she would consider the fee increases, she would be looking "very closely" at potential trims to the mayor's proposal.

No layoffs of city employees are planned, but furloughs are still an option as the city negotiates with union representatives. Last year, most city employees were furloughed up to nine days.

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