Mayor plans to raise bottle tax to pay for school construction

Plan would require council approval

November 10, 2011|By Julie Scharper, The Baltimore Sun

Mayor Stephanie Rawlings-Blake will seek to raise the city's bottle tax from 2 cents to 5 cents as part of a plan to boost funding for school construction and repairs, her administration said Thursday.

The bottle tax money and other revenue would create a funding stream of $23.8 million that the Baltimore school system would use to float $324 million in bonds to renovate and replace dilapidated buildings.

The mayor's proposal has reignited the debate that accompanied the City Council's approval last year of a 2-cent tax on bottled beverages, a vote that came after months of wrangling and fierce opposition from retailers and the beverage industry.

A measure to raise the tax to 5 cents could be introduced in the council as early as Monday. A 5-cent tax could generate up to $11 million in annual revenue, mayoral spokesman Ryan O'Doherty said.

The proceeds from the bottle tax would be combined with some of the revenue from a planned slots casino in Baltimore, as well as savings from a change to the city's school funding formula. Rawlings-Blake would ask the state legislature to increase the cap on the school system's ability to sell bonds, O'Doherty said.

Education advocates warned that $324 million would not go very far in addressing the schools' needs. A 2010 report from the American Civil Liberties Union identified $2.8 billion in necessary renovations and construction. Hundreds of students, teachers and parents rallied across from City Hall last week to protest conditions in schools such as rodent infestation, broken windows and doors, and a lack of adequate heat and air conditioning. Another protest is planned for Sunday.

"It's a good first step, but much more will need to be done to get to the $2.8 billion needed to modernize all the schools in Baltimore," said Bebe Verdery, education director of the ACLU of Maryland.

Verdery called on Rawlings-Blake to use the entire capital budget for schools to float bonds. The $23.8 million in new funds would be in addition to $17 million that the city now sets aside for school facilities.

Store owners and beverage lobbyists complained that the bottle tax would drive shoppers across the county line to buy groceries.

"This was like getting hit upside the head with a can of peas today," said Rob Santoni, chief executive of the eponymous Highlandtown grocery store.

He accused Rawlings-Blake of showing "an outright disrespect for Baltimore businesses," saying his store has lost more than half a million dollars in sales over the past year, which he attributed to the city tax.

If the higher bottle tax is approved, the plan would be in place by the fiscal year that begins in July 2013, O'Doherty said. The proposed tax would be of indefinite duration, he said — unlike the current 2-cent tariff that was to sunset after three years.

Rawlings-Blake's proposal depends on revenue from the casino planned for Hanover Street, near the stadiums. The casino's opening has been delayed by more than a year; the state slots commission is considering the sole bid that was received this fall in response to a request for proposals.

The mayor has pledged to use 90 percent of the city's portion of slots revenue to decrease Baltimore's property tax rate — which is twice as high as the rate in surrounding counties — by 9 cents over nine years.

The remainder, an estimated $1.6 million annually, according to O'Doherty, would go to school construction.

An additional $12 million would come from savings that school officials discovered this year when they adjusted the formula by which the city's contribution to schools is calculated, O'Doherty said.

Voters approved this week the creation of a fund to hold money for school construction, a measure originally introduced by Council President Bernard C. "Jack" Young and Councilman James B. Kraft.

A spokesman for Young did not respond to requests for comment Thursday. Young abstained from voting on the bottle tax last year, citing a conflict of interest because a relative worked for a bottler, but privately lobbied against the tariff.

Councilman Carl Stokes, chairman of the taxation and finance committee, said Thursday that he would not support the mayor's proposal.

"I think it is the wrong way to fund school construction," Stokes said. "We need to do right by our children, but not by making their parents pay another regressive tax."

The council arrived at the 2-cent tariff after months of tense negotiations, while simultaneously — and with much less debate — passing substantial increases to energy, cellphone and income taxes, parking fines and other fees.

The council voted down a 4-cent measure proposed by Rawlings-Blake but, after a series of reversals by council members, the tax was approved at a lower rate for a shorter period. Milk, fruit juices and 2-liter bottles are exempt from the tax.

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