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Rawlings-Blake readies for battle over proposal to raise bottle tax

Mayor Stephanie Rawlings-Blake's administration is gearing up for a tough fight over her plan to raise Baltimore's bottle tax to pay for repairs to dilapidated city schools.

A bill to increase the 2-cent tax to 5 cents – and devote all bottle-tax revenue to school renovation and repairs – could be introduced as early as the City Council's first meeting of the year Jan. 9, officials said. While education advocates support the measure, it is strongly opposed by retailers and the beverage industry.

"The mayor is going to put herself out there and be the target of those attacks to increase the city's contribution to school construction," said mayoral spokesman Ryan O'Doherty.

A coalition of bottlers, distributors and store owners launched a barrage of advertising when Rawlings-Blake pushed for the 2-cent tariff in 2010.

Raising the tax is a key element of the mayor's plan to raise money to fix city schools, which require an estimated $2.8 billion in repairs.

The proceeds from the tax, which officials estimate would bring in $10 million a year, would be combined with revenue from slots and other savings to create a $23 million stream of revenue. The school system could use that money to float as much as $300 million in bonds, which education advocates say is an important first step toward fixing the schools.

A beverage industry representative declined to say how her group planned to fight the measure this time. "It's a long time between now and Jan. 9," said Ellen Valentino, executive vice president of the Maryland-Delaware-D.C. Beverage Association. "Before I see the proposals, I don't want to speculate."

Opponents of the tariff say Baltimoreans are already saddled with exorbitant tax rates and can't handle another increase. The city's property tax rate is more than twice that of the surrounding counties, and Rawlings-Blake has raised more than 60 taxes and fees during her nearly two years in office.

"It's just one more thing that makes doing business in the city more expensive than doing business across an imaginary line," said Councilman Bill Henry, whose Northeast Baltimore district brushes the Baltimore County line.

Henry, who opposed the tax in 2010, said he had promised Rawlings-Blake he would keep an open mind about the increase. He said he supports fixing the schools but is not convinced that the bottle tax is the best way to do it.

"They're going to have to make a very compelling case, because I don't like it," Henry said. "I think it's a bad tax."

He questioned why Rawlings-Blake had not decided to devote a greater portion of revenue from a planned slots casino to school construction. She has pledged to spend 10 percent of that money on schools and use the remaining 90 percent to help lower property taxes by 9 cents on the dollar over nine years.

The battle over the bottle tax will likely take on a markedly different tone this time, since the proceeds are slated to go to school construction, regarded by many as one of the city's most pressing needs.

"The difference between this bill and the 2 cents is that this money is going to education," said Council Vice President Edward Reisinger.

Many of Baltimore's schools lack functioning heating and cooling systems, and they have broken doors and windows and other serious problems, according to a 2010 report from the American Civil Liberties Union.

A coalition led by the ACLU, Baltimoreans United in Leadership Development and other activist groups will lobby council members to support the tax increase, said Bebe Verdery, the civil rights group's education director.

The measure will likely face its toughest challenge in the council's Taxation and Finance Committee, of which Henry and Reisinger are members. Only two of five committee members — Reisinger and Councilman William H. Cole IV — have signaled their support for the tax increase.

Under conventional council protocol, the committee would need to approve the bill before it could go to the full body for a vote.

Councilman Carl Stokes, who chairs the committee, says he wants to hold off voting on the bill until March, when finance officials release the city's preliminary budget.

"It's going to be a few months until we bring this bill to a hearing," said Stokes. "I'm not going to do anything in a vacuum."

Stokes, an outspoken opponent of tax breaks for big development projects, said he wants to look at all revenue measures at the same time. The councilman, who helped found an East Baltimore charter school, grudgingly voted for the 2-cent measure in 2010.

But Reisinger, who as the mayor's floor leader champions her agenda, wants the measure to be brought to the full council quickly. "I feel strongly the eight votes are there" to pass the measure, he said.

Council President Bernard C. "Jack" Young could push Stokes to move the bill more quickly, but it is unclear whether Young will act — or whether he will weigh in on the bill at all.

Young abstained from voting on the tax in 2010, citing a conflict of interest because a cousin worked for a beverage distributor and had lobbied against the bill.

The city ethics board later determined that Young was free to vote on the tax — although not obligated to — because a cousin is not considered a close enough relation to present a conflict of interest, said Geremy Bass, a spokesman for the council president.

Young has not decided whether or how he would vote on the tax, Bass said.

Education advocates say Rawlings-Blake's plan is a key first step in funding school repairs, but they note that much more money is needed. "This is a significant dent in a much greater need," Verdery said. "It would be key to us that we don't stop there."

Verdery said Rawlings-Blake expressed interest in a funding strategy used by Greenville, S.C., officials to pay for a major school construction program there. Under that model, the city and school system would need to partner with or form a nonprofit that could float a much larger amount of bonds.

The coalition is also seeking Rawlings-Blake's guarantee that the bottle tax proceeds would be dedicated to school construction in perpetuity, Verdery said.

O'Doherty, the mayor's spokesman, confirmed that the administration is studying the South Carolina model, but said the first step is approving the tax increase.

"We need to get the funds in place now, so that when the revenues start coming in, we'll have the best plan to leverage them," he said.

julie.scharper@baltsun.com

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