Mayor Kurt L. Schmoke's proposal to raise Baltimore's piggyback income tax rate from 50 percent to 55 percent of the state income tax is expected to face some tough questioning when it reaches the City Council tomorrow.
Many members are concerned that raising the tax would create another reason for middle-class people to flee the city. Already, the city property tax rate of $5.90 per $100 of assessed valuation is by far the highest in Maryland and more than double the rate in Baltimore County.
"We're reluctant to introduce any new taxing in Baltimore City," Council President Mary Pat Clarke said.
The proposed increase would bring the city an estimated $10 million a year in new revenue, said Edward J. Gallagher, the city budget chief.
The mayor told Ms. Clarke that the new money would go to public safety, including the hiring of 250 new police officers and more firefighters during the fiscal year that begins next July, the council president said.
Ms. Clarke said revenue from the proposed increase cannot be counted on to plug a $16.1 million gap in the city budget caused by recent state aid cuts because -- even if passed by the council -- the tax will yield no new revenue to the city until the closing months of the budget year that ends in June.
"The budget people have said it would be April or May before wsee any of the money," Ms. Clarke said.
As a result, the current budget gap is likely to be closed through furloughs or layoffs of city employees. Mr. Schmoke has said that he would make a decision on that matter by January.
But it was council concern about the city's overall tax burden that caused Mr. Schmoke to introduce a bill calling for a 10 percent increase in the tax -- to 55 percent from 50 percent -- rather than the 20 percent increase he had discussed earlier.
"The council was just opposed to going to 60 percent," Mr. Schmoke said. The fact that Baltimore County has a 55 percent income-tax rate makes the proposed increase more palatable, Mr. Schmoke said.
The legislation passed by the General Assembly authorizing the city to raise the tax requires that the increase be imposed by Dec. 31.
"It is time to get this on the table for discussion," Ms. Clarke said.
The piggyback tax is the percentage of the state income tax assessed by local governments. It is collected by the state comptroller's office and turned over to the subdivisions.