Localities raise fees instead of taxes Executives say tax resistance leaves no choice


Unable to sell the public on tax increases, Maryland's local governments are raising money by increasing fees for everything from recycling to ambulance service.

In recent weeks, as mayors and county executives have started drafting budgets for the coming fiscal year, they have turned to user fees with vigor.

The Howard County executive has proposed a $125 annual trash hauling fee. Carroll County is planning to raise fees for the third time in as many years. In Montgomery County, the school board has endorsed charging students $50 a year to ride the bus to school.

The city of Annapolis has even proposed charging for emergency ambulance service.

Anti-tax groups say that raising user fees is a sneaky way of increasing taxes. County executives argue that the increases are a sign of the times, shaped by bleak economic realities.

"This is the response to not raising property taxes," said Kristen Mark Hughes, associate director of the Maryland Association of Counties. "The people who are benefiting from the services are paying for them. That's really the only alternative."

Since 1990, user fees have grown as a proportion of revenue in almost every Maryland county.

Of Maryland's seven largest jurisdictions, Baltimore County has raised fees the most, from 7 percent of the county's revenue in 1990 to 10.2 percent in 1994.

The share of revenue from user fees in Prince George's, Howard, Harford, Carroll and Montgomery counties has grown between 1.4 and 2.7 percentage points. In Anne Arundel, the charges have declined as a proportion of county revenue, even though the amount of money from fees has increased.

Guiding the increases is a simple philosophy: Those who use government services must pay more for them. It is the same theory that created service taxes -- surcharges on utility, hotel, deed-recordation and other local bills.

But the end result is the same as a tax increase. Although the "amount due" on property-tax bills may not be growing, Maryland taxpayers are spending more for local government.

"It's not a major amount of money yet," said John D. O'Neill, president of the Maryland Taxpayers Association. "But it's a creeping paralysis."

County executives, facing public hostility to new taxes, have been raising user fees rather than battle for sweeping property or sales-tax increases. By forcing the public to pick up more of the tab for some programs, county officials are able to shift money to so-called universal services -- police, fire, roads and education.

County finance officials say rising fees are not a symptom of profligate government but economic necessity. Baltimore County, for instance, has shed 920 jobs in the last five years and is now below its 1987 employment level.

The state Department of Taxation and Assessments projects a 1.4 percent increase in property value for the coming fiscal year, a rate that does not keep pace with inflation. Property taxes account for roughly one-third of county revenues -- more than any other source.

At the same time, Maryland counties are bracing for 40,520 new students expected to enroll in public schools over the next eight years, including almost 15,000 in Montgomery County and more than 7,000 in Howard County.

"It's simply been a matter of trying to keep programs alive," said Steven D. Powell, Carroll County's director of management and budget.

Montgomery County, for example, says the $3.5 million it would raise from school bus fees would add kindergarten to five schools, add 17 Head Start classes and restore some middle-school athletic programs cut in the early 1990s.

The plan, which would affect 58,000 students, is unprecedented in Maryland. To make it more palatable, school board members say the proposal, which may need state approval, would exempt low-income students as well as those in special education programs.

In Howard County, the annual Recreation and Parks Department budget has tripled since 1991, to $11 million. But because the public is paying more for a variety of services -- from softball-league teams to after-school youth programs and dance classes -- the county administration is actually contributing less general-fund money to its operation.

"People want to know where their tax dollars are going," said Raymond S. Wacks, Howard County's budget administrator. "When you say you are going to have a general tax increase, people have a feeling their money is going to get lost. But if you raise fees for garbage or parks, people know it's going to go for that. They take comfort that it's not being wasted in a big pot, but being used for a purpose."

Baltimore County has raised 911 fees, parking fines, building permits and other fees by more than $1 million annually. In 1993, the county began charging senior citizens a fee for riding public transportation, a service that had been free.

In Prince George's, user fees have risen so much that County Executive Wayne K. Curry has decided he has no choice but to raise taxes. At 15.1 percent of the county's revenue, user fees in Prince George's account for the largest share of revenues among the state's seven biggest jurisdictions. Last year, recycling fees rose as much as $218 a year to cover a deficit. South county residents received $200 to $800 bills to cover "storm-water management" fees.

"We think we've raised [fees] over the last four years to the extent that we can," said Douglas A. Brown, Prince George's budget director.

On both sides of the political spectrum, user fees have critics. Fees are considered regressive taxes because they do not vary by income level. And they are not deductible from federal income taxes; local property and income taxes are deductible for those who itemize their returns.

For their part, anti-tax groups say there is an alternative to raising fees: Cut spending.

"They're still looking at it from a revenue perspective and not from a how-do-we-save perspective," said Robert C. Schaeffer, chairman of the Anne Arundel Taxpayers Association. "Any fool can govern with lots of someone else's money. Good government is doing it with less."

Politicians tend to look to user fees first because they can be adjusted by the county executive and county council. Sales tax increases must receive state approval, which generates more attention and opposition. And, says Howard County Executive Charles I. Ecker, "there's a lot of opposition to raising property taxes."

Some tax watchdogs complain that local governments then try to hide user-fee increases in thick spending plans, something Mr. Ecker tacitly acknowledged when he unveiled his trash-hauling fee last month.

"This is not a hidden tax increase," he said. "This is an increase. I want people to know that."

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