Income Tax Revenues

An larger-than-expected $6 million surplus from the fiscal year that ended June 30 has bolstered Baltimore County's year-old Rainy Day fund to $17.5 million, officials said yesterday.Budget Director Fred Homan said that $5 million of the unexpected money is from higher-than-expected income tax revenues, but he cautioned that it won't be clear until next month whether the $5 million represents a real increase in county income or is the result of an uneven distribution by state tax officials.

County officials expect a drop-off in income tax revenue from this fiscal year to next, something that's happened only once since the county began collecting the tax in 1964. News of the possible decline in income tax revenue, the second-largest portion of general fund revenue, was delivered by county budget director Raymond S. Wacks last week during a meeting of state legislators and Ulman administration officials. County leaders are still awaiting word on whether another round of state budget cuts to local governments will materialize as Gov. Martin O'Malley works to solve the looming shortfall.

Maryland would lose $7 million in state income tax revenues by 1995 as a result of President Clinton's proposal to freeze federal workers' salaries and cut their cost-of-living increases, according to state officials.William S. Ratchford II, director of the Department of Fiscal Services, said yesterday that state officials estimated the Clinton proposal would begin to be felt in the fiscal year that ends in June 1994."We think the cost impact over the next fiscal year will be $3 million," said Mr. Ratchford.

Howard County could see a slight revenue shortfall this fiscal year instead of the $12 million surplus predicted a year ago, but the worst news may yet be coming, officials say. With state budget cuts looming amid a struggling economy, county budget director Raymond S. Wacks described an uncertain revenue picture to the County Council in a briefing this week. "It's been a roller coaster of a summer," Wacks said. "Who knows how many more bumps in the road are facing us?" Wacks spoke to the council Tuesday morning - its last meeting in the George Howard Building before renovations prompt relocation to rented space in a Columbia office building.

Talk about short honeymoons. New county executives Charles A. Dutch Ruppersberger III in Baltimore County and Wayne K. Curry in Prince George's barely got time to brush the confetti off their lapels when they realized they had been left with huge deficits by the men they are replacing.In Prince George's, the $45 million surplus from the last fiscal year that Parris N. Glendening touted in his campaign for governor rapidly dissolved into a $107 million deficit expected for the coming budget year.

Harford County Executive David R. Craig has asked department directors to trim this year's budget to address a nearly $7 million shortfall in its $900 million fiscal year 2009 budget. Each agency must cut five percent from its operating costs. Craig used an unprecedented meeting with the county council to detail "where we are in revenue and where we need to go with expenses, so that we will have money in April, May and June," he said. He detailed for the council last week how critical cost savings will be this year, when the national economy, the state's fiscal crisis and the decrease in revenues tied to the housing industry and jobs continue to cloud the budget picture.

Baltimore County's tax revenues are expected to be $27 million below what the county estimated this year, Executive Roger B. Hayden said yesterday.That's nearly twice as large a drop as budget officials had predicted just a few weeks ago, and Mr. Hayden says it will create a deficit of $14 million to $23 million -- unless there aremore county budget cuts.The size of the deficit will depend on which budget plan the General Assembly adopts.The deficit would be $14 million under the plan proposed by House Speaker R. Clayton Mitchell Jr. The Mitchell plan, which has the support of the governor and the Maryland Association of Counties, would cut $88.5 million more from state aid to local governments, instead of the $142.

Howard County's incipient tax protest movement wasn't in evidence last night at a public and televised two-hour discussion of the local budget dilemma and the Robey administration's request for higher real estate transfer taxes. Several Republican legislators often critical of Democratic County Executive James N. Robey's tax policies watched from the back, but written questions accepted from the public were not hostile to the program's basic premise: how best to raise revenues to pay for the growing county's school construction and classroom staffing costs as income taxes stagnate or decline.

Unexpected new state revenue payments have erased a $3.9 million deficit projected for Baltimore County this budget year. But a $15 million deficit still is projected for next year, and things don't look bright for the future.The good news is that the deficit projected for the current fiscal year, which ends June 30, has been erased. There are two reasons.First, the state notified the county last month that it had underestimated the amount of income taxes the county was due last fall. The comptroller's office said the processing of an unusually high number of tax returns was delayed because of extensions requested by individual taxpayers and by state tax law changes in 1993.

Last year's un-merry Christmas for retailers and other economic troubles have left Maryland's tax receipts so far below estimates that officials may be forced into yet another round of painful budget cuts.Figures released yesterday by Maryland Comptroller Louis L. Goldstein for the current fiscal year show the state's two largest sources of revenue, sales and income taxes, running more than $26 million below the revised estimates made by budget planners in December.Fiscal 1991 is only eight months old and the state budget has had to be revised twice to make up for tax shortfalls.

Harford County Executive David R. Craig has asked department directors to trim this year's budget to address a nearly $7 million shortfall in its $900 million fiscal year 2009 budget. Each agency must cut five percent from its operating costs. Craig used an unprecedented meeting with the county council to detail "where we are in revenue and where we need to go with expenses, so that we will have money in April, May and June," he said. He detailed for the council last week how critical cost savings will be this year, when the national economy, the state's fiscal crisis and the decrease in revenues tied to the housing industry and jobs continue to cloud the budget picture.

One year after dire economic forecasts forced local governments to rein in spending, city and county leaders in the Baltimore area are finding themselves suddenly -- and unexpectedly -- flush with cash. With multimillion-dollar budget surpluses cushioning government treasuries, the region's county executives and Baltimore Mayor Martin O'Malley are planning for construction projects, replacing aging equipment or adding money to programs designed to spur economic development. "This is an unusual, short-term opportunity for us, and we are not alone," said Ted Zaleski, director of management and budget for Carroll County, which is expecting a $21 million surplus.

The weather outside may be cold, but county officials maintain that Howard's economic outlook is warm and rosy. Office vacancies are down sharply, job growth is predicted to be strong and unemployment is low, and Howard's coveted AAA bond rating was recently reaffirmed by three New York bond rating houses. That means the county's bonds can attract the lowest interest rates - under 4 percent - and have the lowest risk factor. Fewer than 20 counties of 3,000 nationally have the top rating.

Harford County has closed its fiscal year with a $22 million budget surplus, at least partially due to an improved economy that led to an increase in income tax revenue. The surplus is $15 million more than county officials anticipated in September. A better economy means more people are working and paying taxes, resulting in Harford receiving $17.4 million more than projected from income tax revenue. "It really is a large surplus," said Harford County Treasurer John Scotten. Scotten said that when the budget was drafted for last fiscal year, which ended June 30, the county's income tax revenue was negative and not projected to grow significantly.

Howard schools will have to return $3.1 million to the county by June 30 to make up for a shortfall in income tax revenue, Superintendent John R. O'Rourke told Board of Education members last night during a meeting. "This is likely to have some very serious consequences," O'Rourke said, adding that he was not prepared to "be specific about that." County Executive James N. Robey had informed O'Rourke hours earlier that he would have to give up 1 percent of the school system's $310 million budget to soften the blow of a $10 million tax deficit from the fiscal year that ended June 30. The news added further injury to the "agony and pain" the system already suffered during its budget proceedings for the current fiscal year, O'Rourke said.

Western County Councilman Allan H. Kittleman's words brought a red-faced Howard County Executive James N. Robey out of his seat on the stage of Bushy Park Elementary school's auditorium Monday night. "We lost $40 million [in future income tax revenues]. Where did that go?" Kittleman, a Republican who voted against higher income taxes, asked the more than 150 parents there to debate their crowded, 27-year- old school's future. Amid partisan bickering over the county's continued budget woes and the big income tax increase championed by Democrat Robey, the executive is trimming government spending to get through yet another leaner-than-expected year, he said.

Raising state taxes is the road to ruinI must take issue with Governor Schaefer and state Sen. Laurence Levitan on the issue of taxes. It is absolutely insane to raise taxes during a recession.If our governor is to be believed, Maryland's financial crisis stems from a slowdown in sales and income tax revenues. The two are closely related. A falloff in retail sales, particularly "big-ticket" items, results in decreased sales tax revenue and lost jobs. Lost jobs leads to a downturn in income tax collections and increased demand for social services.

Howard County Executive Charles I. Ecker said yesterday that county residents should not expect a lower property tax rate this year, because tax revenues still are sluggish."

Howard County's incipient tax protest movement wasn't in evidence last night at a public and televised two-hour discussion of the local budget dilemma and the Robey administration's request for higher real estate transfer taxes. Several Republican legislators often critical of Democratic County Executive James N. Robey's tax policies watched from the back, but written questions accepted from the public were not hostile to the program's basic premise: how best to raise revenues to pay for the growing county's school construction and classroom staffing costs as income taxes stagnate or decline.

CA to study lowering assessment rate as much as 20 cents The Columbia Association will begin studying the economic effects of lowering the assessment rate as much as 20 cents, to 53 cents, to ease homeowners' burdens from sharply rising home values. The annual assessment charge, which is based on property values, is 73 cents per $100 of valuation assessed on 50 percent of the fair market value. On Sept. 25, the association staff told the association board that if the rate was lowered to 71 cents, the association probably would be debt-free by 2015.