On March 24th, the Mayor released her Preliminary Budget for Fiscal Year 2011. To close a $121 million budget gap, the plan eliminates over 900 positions, 606 of them filled with current workers. This "doomsday" plan would close most of our rec centers, eliminate the Police helicopters and marine units, close seven fire companies, stop bulk trash pickup, close school-based health clinics, reduce staffing at Animal Control and cancel street resurfacing projects, among other reductions and eliminations of City services.
On April 12th, as part of its Comprehensive Budget Plan, the Administration introduced nine pieces of legislation aimed at generating about $50 million in new revenue. These monies would be used to offset a portion of the $121 million deficit that the City is facing for FY2011, allowing for some restorations of some of the cuts - such as all of the ones listed above - specifying $41.4 million in “priority restorations”, which would save 355 City employees (mostly Fire and Police) from being laid off.
Even with this entire revenue package though - as well as other efforts such as continuing furloughs and having City employees pay a greater share of their prescription drug benefits - we have been told that we will still be laying off about 250 City employees, as part of the other $71 million in the Administration's budget-cutting measures.
Throughout the process, everything that the City is doing has been up for review. The Council's Budget & Appropriations committee has held countless hours of agency hearings, with members grilling department and bureau heads on all levels of spending and operational policy. Given the scope of the deficit however, waste-trimming here and there is not going to be sufficient to the task.
Here are the revenue increases that the Mayor has asked for:
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- Bill 10-0467 - Hotel Room Tax Rate - $3.9M new revenue - Would raise the tax on hotel charges from 7.5% to 10% of hotel guest charges. Along with the additional $3.9M to the general fund, an additional $2.6M is generated by this tax which would go to Visit Baltimore, which promotes tourism in the downtown area.
- Bill 10-0468 - Local Income Tax - $5.9M new revenue - For persons living in Baltimore City, the local income tax rate would increase from 3.05% to 3.20% of taxable income for 2011 and thereafter. For an individual making $36,900 a year, it would be an additional monthly charge of about $4; for a family of four making $73,800, the additional monthly charge would be about $7.
- Bill 10-0469 - Property Tax - Discount for Early Payment - $2.5M estimated “saved”* - Currently, property owners receive a 1% discount on property taxes paid before July 31 and a .50% discount before August 31. This legislation would eliminate all discounts after July 31 and reduces the July discount to .50%. *The $2.5M savings estimates are based on the termination of August discounts. No estimates yet of July savings.
- Bill 10-0470 - Energy Tax-Rates - $8.16M new revenue - To quote the Finance report, “This bill will increase the current Baltimore City Energy Tax by 15%. Additionally, taxes for nonprofit users of energy will be charged the same rate as commercial users.”
- Bill 10-0471 - Parking Tax Rate - $5.08M new revenue - Increases the Baltimore City parking tax from 16% to 20% in parking garages, both privately and publicly owned.
- Bill 10-0472 - Parking Violations-Fines - $1.68M new revenue - Increases City parking fines by 20% by violation category.
- Bill 10-0473 - Telecommunications Tax-Rate - $3.74M new revenue - Increases local tax on phone lines in Baltimore city from $3.50 to $4.00 per line and increases Centrix rates from 35 cents to 40 cents.
- Bill 10-0474 - Beverage Container Tax - $11.4M new revenue - Imposes a 4-cent surcharge on non-reusable beverage containers (bottles & cans) which are sold in Baltimore City. It would NOT include containers of dairy products, non-dairy milk substitutes, beverages containing at least 10% natural fruit juices, and any beverage of 2 liters or larger, but it WOULD include bottled water and alcoholic beverages. It would not include beverage containers for which deposits are paid by consumers and refunds are paid by dealers.
- Bill 10-0475 - Bed Capacity Fee - $3.94M new revenue - Imposes an annual fee of $350 per bed on every college/university dorm and hospital which is a private, tax-exempt institution.
- Board of Estimates - Parking Meter Rates - $3.1M new revenue - Raises the parking meter rates for on-street parking from $1/hour to $2/hour in parts of downtown, Midtown, Federal Hill, Harbor East, Fells Point, and Canton. (This did not involve City Council action and has already passed the Board of Estimates at their meeting this past Wednesday.)
After attending the hearings on these bills and listening to constituents - in person, by phone and by email - I am leaning towards supporting all of the Mayor's requests, with some qualification and two exceptions. In terms of qualification, my hope is that we will be able to put together a "consolidated" revenue package which "spreads the pain" out among a broader base, allowing us perhaps to reduce some of the Mayor's proposed rates for her tax increases, offsetting these reductions with increases in other existing revenue measures. In terms of exception, I do not support the bottle tax, nor the bed fee…unless it is amended to charge more for hospital beds and less for college beds, acknowledging the significantly larger number of customers amongst which this fee would be spread.
I continue to be against a “bottle” tax for perhaps parochial, but legitimate reasons; businesses in our district are at a greater risk of losing sales to county competitors than many others in the City. While I have listened to all of the good points made by its proponents, there is no denying the simple fact that no matter how good they think such a tax might be, it would definitely be better if we were not the only ones doing it. If we don't need to do it right now - as many of the Council feels there are other alternatives - then we should wait until we can bring Baltimore and Anne Arundel counties to the table and do it as a regional initiative - which, by the way, is how it was done last time.
I am also against the bed capacity fee as it is currently designed. While I acknowledge that a fair chunk of the real property in the City is exempt from property tax and that this places a burden on the rest of us, I think the bed fee is designed inequitably. Any reasonable attempt to get non-profits throughout Baltimore to pay a fairer share of the costs of running this City would not be generating more than a quarter of its total proceeds from Loyola University alone. Plus, given the effort that the surrounding communities have put into getting Loyola to house more of its students on campus - and the cooperation that Loyola has provided – it seems unfair now to penalize them for having done what we asked them to do. I remain hopeful that the Administration and representatives of the larger non-profits will work out a arrangement that allows these institutions to make a PILOT (payment in lieu of taxes) that will provide the City with needed revenue, but more equitably generated.
A "Consolidated" Revenue Package
For what I've been told is the first time in recent history, the Council has stepped up to the plate during this budget season with a willingness to propose its own revenue generators. Over the last month and a half, the following measures have been brought up for consideration by the Council, as alternatives to some portion of the Mayor's revenue package:
- Bill 09-0290 - Simulated Slot Machines - $1.9M new revenue
- Bill 10-0489 - Miscellaneous Offenses - Citation and Penalty Amounts - $173K new revenue
- Bill 10-0503 - Outdoor Advertising Excise Tax - $1.6M new revenue
- Bill 10-0516 - Non-Owner-Occupied Dwellings and Vacant Structures - $1M new revenue
- Bill 10-0206R - Funding from Oversize and Overweight Trucking Permits - $1.1M new revenue (This would also not involve City Council action and could be done by the Board of Estimates at any time.)
Between the $5.7 million available from these additional revenue proposals, and the additional funds available by adjusting some of the rates in the Mayor's own proposals, I feel confident in saying that the opportunity is there for the Mayor and City Council to come together with a final budget plan that maximizes the revenue available to maintain crucial City services, while minimizing the negative impact on any given part of the City's economy.
So, this is where I - and to some extent, we - are right now. If you haven't already shared your thoughts on all of this with me, I still want to know what you think. As I said before, while I may not be able to do everything that each of you suggest, I promise that I will carefully consider your thoughts and recommendations as we move forward through this difficult process. Thanks!
- Bill
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The Honorable Bill Henry
4th District - Baltimore City Council
(410) 396-4830 - voice
(410) 659-1792 - fax
http://friendsofbillhenry.blogspot.com/
City Hall Office:
100 North Holliday Street, Room 502
Baltimore, Maryland 21202
District Office:
5225 York Road, Suite D
Baltimore, MD 21212
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