City budget: treading water


With considerable trepidation, Baltimore City decision-makers have continued the property tax of $5.90 for each $100 of assessed value. This levy is by far the highest in Maryland and double that of most surrounding jurisdictions.

But even though the coming fiscal year's budget is so lean that 26,000 municipal employees have to forgo pay increases for a second consecutive year, there still is no certainty that the city will be able to fare without emergency belt-tightening. "We are worried about additional state cuts in the fall," said Budget Director Edward Gallagher. "The revenue estimates coming out of Annapolis are not encouraging, either."

The city had the option of increasing the piggyback tax on its residents' incomes. But the Schmoke administration decided against following the example of Baltimore County, which increased its piggyback tax from 50 to 55 percent. With its extraordinary property tax burden, staggering car insurance rates and other costs that are higher than those in any surrounding jurisdiction, Baltimore City has to be careful about retaining its competitiveness. This is particularly important because the flight of the middle class to the suburbs shows no signs of abating.

The narrow margins under which the municipal government must operate may be good for exercising fiscal self-discipline. But they also underscore the continuing importance of streamlining the city's bureaucracy. Not so long ago, an inhouse task force devised ways to eliminate fat and duplication by merging departments.

The Schmoke administration seems committed to the course. During the fiscal year that starts next month, the public works and traffic departments are expected to be combined. More governmental compression is in the offing later on.

While it is true that the municipal bureaucracy got bloated during the fat years, when the city's tax base was stronger and federal handouts more generous, there are limits to how much the employee base can be cut. For that reason, Baltimore must redouble efforts to draw new businesses into the city and make sure existing ones stay here, thrive and expand.

The city also ought think about ways to negotiate payments in lieu of taxes from the numerous tax-exempt organizations which own and operate property here but contribute nothing for the varied municipal services they enjoy. The time for civic free-loading is running out.

Once adopted, the property tax rate cannot be changed for another year. Neither can the city later increase the piggy-back tax, even if disappointing revenues might force the state to make additional cuts during the new fiscal year. These are the kinds of risks decision-makers must take.

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