County user fees balance budgets, 'spread the pain'


ANNAPOLIS -- Question: What do a Howard County softball player, a Millersville mother of three and a Baltimore County cable television subscriber have in common?

Answer: They are all a crucial component of local government finances this year.

With Maryland still in the throes of economic recession, and government feeling the pinch, the state's revenue-hungry subdivisions have turned to an old standby, the user fee.

Whether it's the price of a parking ticket, a permit to build a backyard shed, or a lifetime pass to a local park, counties are literally nickel-and-diming their way to balanced budgets.

In Baltimore's growing suburban counties, the money collected from such penny-ante fees is no small change. It amounts to millions of dollars in new tax revenues at a critical time: Other revenue sources are stagnant or shrinking; subdivisions are freezing salaries and laying off employees to make up budget deficits.

"This year with the revenue crunch, we felt a little flexibility was in order," said Raymond S. Wacks, budget administrator in Howard County, where at least a dozen such fees were raised. "We knew we had to spread the pain equally."

Mary Breen, a secretary from Millersville, will feel the impact of Anne Arundel County's budget-balancing later this month when

she sends her 11-year-old daughter, Elizabeth, to "Camping With Computers," a one-week course sponsored by the county's school system.

Mrs. Breen will pay $270 for the program, conducted at Arlington Echo Outdoor Education Center in Millersville, twice last year's rate. The school board recently decided to double nearly all its summer camp fees so that the program would be self-sustaining.

"If you have more than one child and spend $250 or more to send each one to camp, look at what you have to pay," said Mrs. Breen. "We're fortunate to be able to pay it, but I'm sure there are people who can't afford it."

David P. Grabowski, an Elkridge carpenter, and Baltimore County Councilman Vincent Gardina, D-5th, also will feel the pinch of new fees, but in entirely different ways.

Mr. Grabowski and his teammates in a slow-pitch softball team must each shell out $40 more this summer because Howard County now taxes adult leagues for use of its playing fields. As a result of the new $15-a-game fee and a loss of sponsors, his league has dropped six of 43 teams.

"We're having a terrible time filling our teams," said Mr. Grabowski, president of the Elkridge Adult Athletic Association. "Parks and recreation should be something the county provides to everyone."

The cost to Councilman Gardina will be about $1.50 more on his monthly bill from Comcast Cablevision. It is the result of an increase in Baltimore County's cable franchise fee, which Comcast has promised to pass along to subscribers beginning in July.

"Our options were limited," said Mr. Gardina, who last month voted against increasing the cable tax from 3 percent to 5 percent of gross revenues. "We had two choices: accept the tax or cut a lean budget by that amount. It wasn't much of a choice."

Indeed, a lack of choices seemed to fuel many of the fee increases that helped subdivisions balance their fiscal 1992 budgets. County governments have little control over many of their revenue sources. Two of their largest -- income tax (counties are allowed to "piggyback" up to 50 percent on state returns) and aid from state and federal government -- have grown too slowly to keep pace with local needs.

Meanwhile, the largest single source of funds for subdivisions, property taxes, have suddenly become untouchable. Last year's property tax revolt and proposed tax caps have made elected officials loath to even consider increasing property tax rates.

"A lot of the discussions over the past year, really all of it, turned on the equity of revenue sources," said Fred Homan, Baltimore County's budget director. "The feeling was that user fees are fairer than the blanket application of property taxes, which are seen as regressive."

Nevertheless, leaders of last year's tax revolt could not have expected this year's record fee increases. Anne Arundel County, for instance, expects to raise more than $5 million of its $616.6 million budget from fee increases.

In Baltimore County, the new cable tax will raise about a third of the $4.1 million the county expects to earn from its various fee increases. That is almost precisely how much the county is losing from potential property tax revenue because of a decision to lower the tax rate by 3 cents to $2.865 per $100 of assessed value.

"I prefer user fees to property taxes, no question; but a county shouldn't need 15 new taxes," said John D. O'Neill, president of the Maryland Taxpayers Association, an fledgling taxpayer organization with membership in Baltimore and 13 counties. "Once they start this, where is it going to end?"

Budget experts admit that the rationale behind user fees is not always easy to explain. Generally, user fees are paid for services that are considered optional -- admission to an indoor swimming pool, for instance -- or for regulatory functions such as certifying the work of builders, electricians or plumbers.

But the application of such fees is often inconsistent. For instance, Anne Arundel County may soon charge $3.50 for admission to its Annapolis pool, recouping 100 percent of the cost of running the facility. However, the county's proposed $4 admission price to nearby Quiet Waters Park will pay for only about 60 percent of the park's annual budget.

In the case of building-related permits, officials note that fees pay a much smaller fraction of the county's true costs, perhaps as little as 5 percent or 10 percent. For some fees, like cable television, there is no relationship to costs at all.

Consider also that revenue derived from fees is not actually set aside but most often goes into the county's general fund. As a result, only a marginal relationship exists between the amount of a fee and the cost of a service provided by the county.

"To some extent, it's a matter of what the market will bear," said Robert R. Neall, county executive in Anne Arundel County, where legislation to raise fees is pending before the County Council.

Another reason subdivisions turned to user fees this year is that few taxpayers ever complain about them. Even in Baltimore County where Comcast sent letters to cable television subscribers, warning them of a proposed fee increase in advance of council action, opposition was minimal.

County officials have found that user fees make taxpayers feel like they are getting something for their money and not depositing it straight into the government coffers.

"People are willing to pay for things when they think there's some direct nexus with the service provided," said Dennis Parkinson, Anne Arundel's budget officer. "They also know government isn't flush with money right now."

Still, user fees finance less than a 10th of county government tTC and can scarcely be relied upon to balance a budget every year. More permanent relief may only come when the state legislature restructures Maryland's tax system -- as recommended in the controversial Linowes commission report -- to make localities less reliant on property taxes.

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