A divided Baltimore County Council on Thursday approved a series of bills sought by County Executive Johnny Olszewski Jr. to raise millions in new revenue, including the county's first income tax increase in nearly 30 years and a new tax on residents’ cellphone service.
The council’s four Democrats supported Olszewski’s plan to raise the income tax rate for the first time since 1992, a move he said was necessary to strengthen county finances and maintain the services residents want. The council’s three Republicans voted against it.
Other bills received bipartisan support, including the cellphone tax; however, the council scaled back Olszewski’s proposal, reducing how much revenue it will generate.
The measures were part of a $3.4 billion operating budget for the year starting July 1 that the council adopted Thursday.
The county faced an $81 million shortfall. In a speech before the council voted, Council Chairman Tom Quirk said the county’s recent fiscal path was unsustainable.
“No one wants to pay higher taxes and we as elected officials do not covet the thought of asking our constituents to pay more,” said Quirk, an Democrat from Oella. “The idea of raising revenues has clearly been an idea of last resort, but is now necessary.”
The income tax increase — from 2.83% to 3.2% — is projected to generate an additional $33 million annually. A person earning $50,000 a year would pay an additional a $180 a year in income taxes under the new rate, administration officials have said.
The property tax rate will stay the same at $1.10 per $100 of assessed value, which it has been since 1988.
With the new budget, Olszewski said, “we are putting ourselves on a sustainable path.” He said he was pleased that several of the votes were bipartisan.
Council members pointed to the cellphone tax as the most difficult. Olszewski initially proposed taxing each cellphone line $3.50 per month, but families and business owners complained that was too much because many have multiple phones.
The council amended the legislation Thursday to tax cellphone service at 8% per account — not per line — and only tax the voice line portion of the bill, not the data plan. The county already taxes landlines at 8%. Republican Councilmen David Marks of Perry Hall and Wade Kach of Cockeysville joined Democrats in supporting the revamped bill.
Councilman Julian Jones, who offered the amendment, said the change means the new cellphone tax will cost half as much for many residents as what was first proposed. The amendment exempts pre-paid phones.
Olszewski’s version of the cellphone tax would have raised $29.5 million a year. It wasn’t clear how much the amended tax would generate.
The council also increased the county hotel tax and applied it to Airbnb-style rentals. Olszewski wanted to increase the hotel tax from 8% to 10%, but council members instead increased it to 9.5%. Kach voted with Democrats in supporting the legislation.
In a 6-1 vote, members also approved Marks’ legislation to impose “impact fees” on developers to pay for schools and public infrastructure. But the council made sweeping last-minute changes that exempt some projects, including those in areas targeted for revitalization and those already in the the development pipeline. Olszewski proposed his own version of impact fees, but the council tabled it.
Republican Councilman Todd Crandell of Dundalk voted against all tax increases — and the budget itself.
“I could not in good conscience go back to my district and tell my constituency that I supported a budget that is supported by higher taxes for hard-working people in Baltimore County,” he told reporters after the meeting.
While some of the votes were bipartisan, Quirk criticized his Republican colleagues in his budget address, saying they wanted new schools and other projects but didn’t want to pay for them. Republicans pushed for budget cuts rather than tax increases.
Quirk’s comments echoed the partisan tone of budget meetings last week, which became heated at times.
The budget provides 2% cost-of-living raises for teachers and county workers, plus $13.9 million to settle a salary dispute with the county police union. The settlement will provide back pay and pay-grade increases for those officers. The budget also pays for additional counselors, special education professionals and English as a Second Language teachers in county schools.
The spending plan adds money for new top positions proposed by Olszewski to carry out his agenda — an opioid strategy coordinator, a chief diversity officer and a sustainability officer to address climate change.
Last week, the council cut $14 million from Olszewski’s spending plan. The bulk of the reductions came from a reserve fund for employee health insurance, as well as cuts to his proposed road resurfacing plan.