Council backs more than $20 million in tax increases

The Baltimore City Council voted to support more than $20 million in tax increases Monday night, enough to stave off nearly all of the cuts to the police and fire departments that city officials have threatened during long and bitterly fought budget negotiations.

Council members said the rate hikes — which include increases to income, parking and telecommunication taxes— would generate enough revenue to prevent the layoffs of hundreds of police and firefighters, the permanent closures of fire companies and the loss of the police helicopter, cuts that were detailed in a doomsday budget to close the city's $121 million shortfall without raising taxes.

The votes bring city officials one step closer to closing one of the most arduous budget seasons in recent memory. Council members and Mayor Stephanie Rawlings-Blake's administration have been engaged in a months-long tug-of-war on the mix of cuts and new revenues needed to close the gap.

Rawlings-Blake proposed a $50 million package of new or increased taxes to mitigate many trims to cherished programs — including rec centers, senior activities and bulk trash pickups. But council members, whose approval is required to raise taxes, chafed at some of the proposals — notably a four-cent tax on bottled beverages. They have drafted several new taxes and fees in an effort to avoid the bottle tax.

Council President Bernard C. "Jack" Young called Monday's votes "a major step in the right direction" toward resolving the budget struggle. And he vowed that the council would move quickly on other proposed taxes to beat the June 30 deadline.

"This process has never been an easy process," said Young. "We have a job to do, and we're going to do that job. We're not rushing anything, but we're on time and on target."

At a hearing on Thursday, council members are slated to unveil an energy tax on industrial buildings, such as factories and warehouses, that is estimated to bring in $8 million, and could eliminate the need for a bottle tax, said Young.

The bottle tax, which finance officials say could generate $11 million, has been attacked in radio and television ads paid for by a coalition of beverage distributors and retailers. Store owners have lobbied council members to oppose the tax, saying it would cause them to lose business to competitors beyond the city limits.

Ryan O'Doherty, a spokesman for Rawlings-Blake, said that he had not seen the proposal and could not comment on it.

The council signaled approval Monday for four measures proposed by Rawlings-Blake: An increase in the income tax rate from 3.05 to 3.20 percent; a 4 percent bump in the parking tax rate; small hikes in taxes on telephone lines; and the end of a discount for some early payments on property taxes. The measures are slated for a third and final vote next Monday, but the second vote indicates broad support from council members.

Two bills crafted by Young — a fee for vacant buildings and stiffer penalties for public drunkenness and other nuisance crimes — also received the council's blessing at Monday's meeting.

And the 15-member body also voted in favor of a proposal by Councilman Robert Curran to impose an excise tax on video poker machines found in bars and convenience stores. The measure was resurrected to help close the budget gap after languishing in committee for more than a year.

The video poker tax, which is estimated to bring in nearly $2 million, and the nuisance crimes bill received final approval from the council, which means they need Rawlings-Blake's signature to become law.

On Thursday, the taxation and finance committee is expected to vote on nearly every other proposed increase — including higher parking fines and a $350 annual fee on hospital and university beds — in order to bring them before to the full council for a vote, committee chair Councilwoman Helen Holton said.

The proposals are slated to move forward even though hospital and university representatives have been negotiating with the administration on a payment in lieu of taxes, or PILOT, that could replace both the bed tax and the energy tax on non-profits.

While several council members have indicated their support for Rawlings-Blake's entire revenue package, others have said they could back the bottle tax only if no other means were found to plug the spending gap.

Councilman Carl Stokes said he would support the tax only if it meant fewer furloughs or layoffs. Even with $50 million in new revenue, 250 city workers are expected to lose their jobs on July 1.

Councilwoman Mary Pat Clarke said she would back the bottle tax only if the funds were dedicated to something she considered "crucial to the city's well-being," such as ending a controversial system of daily rolling closures of fire companies.

And Councilman Bill Henry, one of the bottle tax's most outspoken opponents, said he would be satisfied if the council agreed on at least $42 million of new taxes — the amount needed to restore the cuts outlined by Rawlings-Blake.

The mayor did not specify how she would direct the other $8 million of revenue, saying that she wanted to make the decision with input from the council, but would consider using it to restore street cleaning and graffiti-removal programs.

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