Arundel takes a balanced approach to its budget

Our view: A modest property tax increase staved off even deeper cuts

May 25, 2011

Anne Arundel County has not been tax-friendly territory. It has the strictest property tax cap in the state, thanks to a voter revolt nearly 20 years ago, and council members have been known to come close to blows over budget measures. Yet this week, guess who came up with a balanced approach — cutting services and adding new taxes — to solve its budget woes? None other than Anne Arundel County.

Here we have a conservative county, led by a Republican executive and council, that — rather than clinging to the credo of never, ever raising taxes — took the common-sense step of upping the property tax 3 cents to 91 cents per $100 of assessed value. This is the maximum allowed under the county's tax cap, but the rate is still one of the lowest in the Baltimore metropolitan area.

Anne Arundel County Executive John Leopold correctly characterized Tuesday's vote by the County Council as the responsible thing to do. An independent auditor and the county's chief budget officer had spelled out the particulars of the county's serious structural deficit. Moreover, the way the county's property tax cap is structured, if the council had not approved the full 3-cent increase, the chance for getting that much-needed revenue would have been gone for good.

Here's why: Arundel's tax cap limits the amount of increased revenue the county can receive from property taxes in any given year to 4.5 percent. In years when assessed values are growing faster than that, the property tax must be lowered to keep the revenue increase within bounds. But in a year like this one, when assessed values are stagnant or falling, leaving the rate where it is would have led to tax revenue growth of less than 4.5 percent. But the cap doesn't allow for a make-up when property values go up again; rather, failing to raise the tax rate this year would have led to a permanent gap in revenues, which the county estimates at about $80 million over the next four years.

The increase Mr. Leopold proposed keeps the county's bargain with its taxpayers — their bills will continue to go up at a low, predictable rate. And he and the council did not enact the tax increase without also making significant spending cuts. Forced furloughs for county workers will result in their losing about 4.6 per cent of their pay. Mr. Leopold will be taking a $15,000 cut in his salary. Approximately 50 positions in county government will be eliminated, some by vacancies, some by layoffs. The council went further than Mr. Leopold wanted in its spending reductions, nixing the purchase of new police cars, slashing funding for the county's community college and diverting money the executive had allocated for the complete rebuilding of Severna Park High School.

Down the road, the economic picture might brighten for the county. Revenue from the much-delayed slots facility at Arundel Mills mall will start to come in, probably in 2013. Meanwhile, money from impact fees and the recordation fees — which dropped drastically in the recession — could pick up as the real estate market recovers. Despite the sour market of recent years, Anne Arundel County still has plenty of pricey homes that offer that much-cherished feature: a view of the water.

The debate over how to plug the holes in the Anne Arundel County budget has not always been high minded. Accusations by some council members that their colleagues were gouging the county by accepting medical coverage were a low point. And prohibiting the police from buying new cruisers may have had symbolic value but was more than likely a fiscal mistake in the long run.

But in the end, Mr. Leopold and the council stared down the no-new-taxes demon and produced a tough but balanced budget. For that, they deserve some credit.

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