City tax package draws opposition at hearing

A steady procession of business leaders told City Council members yesterday that Mayor Martin O'Malley's proposed tax package will stifle Baltimore's real estate market and make it more expensive for companies to operate in the city.

Representatives from the real estate, telecommunications and nonprofit industries expressed opposition to two elements of the mayor's three-pronged tax plan aimed at eliminating a projected $40 million deficit for the fiscal year that begins July 1.


The council's taxation committee held hearings yesterday on O'Malley's proposed $3.50 monthly tax on traditional and wireless phones and a proposed increase in fees for recording real estate purchases, from 0.55 percent to 1 percent. A new levy on utility bills will be discussed today at 5 p.m.

Without the taxes, Deputy Mayor Jeanne Hitchcock said, the city would have to balance its $2.1 billion budget by laying off 181 police officers, closing fire units, curtailing library hours, cutting recycling and reducing trash collection.


City officials estimate that the increase on the real estate transaction tax will generate $7.3 million more in annual revenues and the phone tax will produce $21.6 million in new revenues.

Business leaders said the city should do more to cut costs.

"It is hard to justify the passage of a tax package that would prove to be counter-productive to economic growth and directly impact efforts to grow the city's tax base," said Donald C. Fry, president of the Greater Baltimore Committee.

Representatives of the Greater Baltimore Board of Realtors Inc. said closing costs in the city would be 48.8 percent more costly than in Baltimore County.

"We already are over the top," said Joseph T. "Jody" Landers III, executive director of the Greater Baltimore Board of Realtors. "Don't do any more damage."

O'Malley found an unlikely ally in Mitchell Klein, a grass-roots organizer and frequent critic. He supported the real estate tax because he said it would hit slumlords and property flippers hardest.

Representatives from the wireless industry said the phone tax would harm consumers and small businesses with higher phone bills. They also questioned the city's legal standing to impose the tax. Nonprofit groups said their operations would become more expensive.