As Howard County officials wrestle with whether to boost real estate transfer taxes to finance more school construction, County Executive James N. Robey is facing another major financial problem - not enough new cash for next year's operating budget.
After barely avoiding an $18 million budget shortfall during last year's elections, Robey has said repeatedly the fiscal belt-tightening cannot go on forever, and with requests far outstripping new revenues, something has got to give.
"It is clearly a separate issue," Robey said, noting that he does not know whether he will propose a general tax increase in April. "I've said consistently I would not rule out any tax increase."
The gap between the expected $30 million in new revenues next fiscal year and the roughly $60 million in requests is not larger than in past years, but it is causing a bigger squeeze than before, said Robey and Raymond S. Wacks, the county budget director.
"It's a very large gap. It's difficult because we're coming off a year where we made so many cuts. There's no place else to cut," Wacks said.
County Council Chairman Guy J. Guzzone, a North Laurel-Savage Democrat, said, "I think there's demand for services we're going to have to fulfill somehow," and raising the transfer tax for school construction won't produce enough money to solve the problems. Freshman Councilman Ken Ulman, a west Columbia Democrat, said he believes Robey is considering an income tax increase.
But Republican council member Christopher J. Merdon of Ellicott City said Guzzone and Ulman "are just following in the Democrat tradition" of talking about raising taxes in the first year after an election. "They did it four years ago," he said.
Republicans want to know whether Robey's plan for a transfer tax increase for school construction is tied to his thinking about the operating budget, and whether it is part of a plan to raise income or property taxes, too.
At his annual State of the County speech Jan. 16, Robey made clear the predicament he sees.
The school board has asked for $34 million in new funds alone, and the executive repeated his comment that "the measures we took last year to put together that budget are not sustainable year after year" without service cuts.
Proposed state budget cuts for Howard County next fiscal year amount to about $6 million so far, but that could change, especially if Gov. Robert L. Ehrlich Jr.'s slot machine plan is not enacted.
Ever cautious, though, Robey refused to say he would increase property or income taxes even under those circumstances. Any increase is likely to become a hot political issue.
Although the 62-year-old Robey is likely to retire after this, his second term in office, three council members - Guzzone, Merdon and Republican Allan H. Kittleman from the western county - are potential executive candidates in 2006.
Robey refused to say "no new taxes" during last year's elections, even as Steven H. Adler, last year's Republican executive candidate, pounded him repeatedly with accusations that if re-elected, the Democrat would raise taxes.
Last week, Robey noted that Howard police salaries have slipped from third in the state to seventh. "We've got to stay competitive," he said.
And Wacks noted that a three-year deal with teachers included a 4 percent pay raise next year, followed by a 6 percent increase in fiscal year 2005. The cost is roughly $18 million next year alone.
"The real issue is, do we want to try to compete to get the best teachers?" Wacks said.
In his first term, Robey, a former county police chief and 32-year civil servant, raised only the fire property tax - a separate levy for fire services, twice.
The County Council raised general property taxes 2 cents for the year, starting July 1, 1999, to raise more money for schools.
Under Republican Charles I. "Chuck" Ecker, who served from 1990 to 1998, the property tax rate rose 14 cents in 1991, during a severe recession, and a new annual trash collection fee of $125 a home was imposed in 1996.
But in his last year, as he ran for governor, Ecker cut the local piggyback income tax rate, which is now the state's third-lowest.
Wacks said that one penny added to the $1.044 per $100 of assessed value property tax rate would being in about $2.4 million more.
Returning the income tax from 2.45 percent to the former level of 2.56 percent - which would equal Anne Arundel County's rate - would bring in $8.8 million over two years.
Robey said too much is uncertain now to say whether a local tax increase is coming.
"We may need more revenue. I've said many times, I think the [county's] property tax is reasonable," he said.
"The income tax is low. If we need to raise additional revenue, there is certainly the ability to do it. I think the time to do it is when it's necessary," Robey said.