Income Tax Revenues

Howard County officials learned this week that the county may have a greater increase in income tax revenue this last fiscal year, which ended June 30, than any other jurisdiction in the state.Officials had hoped for even more.County Executive Charles I. Ecker's budget gurus had forecast income tax revenue of $90 million. The actual amount, they learned last week, was $89.2 million, up 9 percent or $7.4 million over fiscal 1992.Although "this is one of the strongest, if not the strongest, growth rate in the state of Maryland," Budget Director Raymond S. Wacks said last week, it is premature to assume the increase means a turnaround in the county's sluggish economy.

In a rare dose of good fiscal news, Baltimore stands to gain an unexpected $9.3 million in local income tax money that the Maryland Comptroller's Office mistakenly sent to Anne Arundel County over three years because of a processing error, state officials say. The comptroller's office says it uncovered the glitch in March but has not determined exactly how much money is involved. And a big question remains unanswered: whether to give Baltimore a lump sum or spread the money out over several years.

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.

While Maryland's budget climate continues to darken, Howard County's brightened sharply yesterday, as County Executive James N. Robey announced that an $18 million budget shortfall predicted last winter is gone. Because of a combination of better-than-predicted income-tax revenues and sharp, though temporary spending cuts, Howard won't need a penny from its $28.8 million Rainy Day Fund to close the books on the fiscal year that ended June 30. Robey got authority from the Howard County Council in May to remove up to $15 million from the county's reserve fund to fill the gap, if necessary.

Facing escalating demands for expensive new schools and other projects, Howard County expects a less generous economy next year that could provide fewer new dollars to pay for them, county Budget Director Raymond S. Wacks said yesterday. Speaking to the County Council, Wacks previewed the next budget year, which begins July 1, predicting slightly higher property tax revenues but a slowing of income tax growth, as capital gains revenues decline in a flat stock market. "We're looking again at a steady and strong growth in the assessable base," Wacks said, noting that some homes in Columbia's newest village, River Hill, might increase in value by 9 percent over three years after years of flat assessments.

Maryland's next governor and General Assembly will face a budget shortfall of as much as $1.7 billion when they arrive in Annapolis in January, threatening severe cuts to state services, according to the latest tax estimates. The dire budget projections stem from a steep drop in anticipated income from tax collections and significant increases in state spending over the past few years, Maryland tax officials said. "It doesn't look good," said Comptroller William Donald Schaefer, whose office released the latest tax estimates.

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.

Having just moved back to Maryland after 23 years in Dallas, I think I can bring some insight as to Texas' merits vs. Maryland. ("A Texas remedy for what ails Maryland jobs," June 22) First, there is the myth that Texas is cheaper to live in than other states. Go to any online cost-of-living calculator and you will find that the cost of living in Maryland is 4 percent to 4.5 percent less than living in Texas, even with the Maryland state income tax. If you earned $50,000 a year in Texas, you'd have an extra $20-$25 a week in your pocket simply by moving to Maryland.

After reporting a projected $8 million revenue shortfall in late January, when he announced an early retirement incentive program for county workers, Harford County Executive David Craig said Tuesday that he doesn't expect further drastic action during the fiscal year - despite $3 million in snow-removal costs and a $1.3 million decline in state income tax payments in February. "We've been pragmatic," he said, by leaving nearly 300 open county jobs vacant and attracting nearly 50 older county workers to the early retirement program.

This past week Sen. John Kerry explained that tax increases are necessary due the current federal government's revenue shortfall (less citizen income, less income tax revenues). This all-too-common view assumes the moral right of government to a constantly rising income stream when neither businesses nor families enjoy such a right. Businesses and families have to live in economic reality; most governments - state and local as well as federal - don't. When governments spend every last cent by fiscal year-end, fail to pass budgets, and repeatedly fail to set aside rainy-day funds, that is financial mismanagement.