Council kills hotel tax rise plan

The Baltimore Sun

Anne Arundel County Council members yesterday scrapped the proposed boost in the hotel tax and severely scaled back an affordable housing initiative yesterday as part of a laundry list of cuts to afford a pared-down budget for the school system.

After two weeks of deliberations and hearings, school officials who met with the county auditor determined that they needed $21 million - not $51 million - to close a budget gap.

Council members have rushed to fill that hole by cobbling together close to $14 million in new funding, taking $3 million from a health care account meant to cover future insurance claims and taking $3.8 million from the chief administrative officer's contingency fund. The lawmakers also slashed funding for County Executive John R. Leopold's proposal to encourage development of work-force housing, cutting its $2 million budget to $500,000.

In the process, the lawmakers dumped Leopold's plan to raise the hotel bed tax from 7 percent to 10 percent, which would have generated $6.3 million a year and was the largest source of new revenue in his budget.

Lawmakers who presented their amendments to the spare $1.2 billion operating budget and $214 million capital budget said the changes would scrape up enough money to fund the county's four union-negotiated contracts, the salaries of new special-education teachers and feasibility studies for renovating or replacing six schools.

"Our budget takes a proposal that was not focused on children, and puts the county's resources where they ought to be: in our school system," said Councilman Jamie Benoit, a Crownsville Democrat. "And it doesn't raise taxes, which would indicate that the 'cold fiscal reality' we heard about a couple of weeks ago isn't quite true."

The council will approve the amended version of the budget by May 29.

Leopold's budget increased spending for fiscal year 2009 by just 2.9 percent, reflecting a $29 million drop in tax revenues from real estate sales.

During talks with county auditor Teresa Sutherland, the school system identified about $18 million in health care costs that were not needed, realized about $3.8 million in savings because the teachers' union opted for 5 percent raises instead of 6 percent raises as originally expected and made the county responsible for about $3 million slated for retiree benefits costs, said schools budget director Susan Bowen.

"I am incredibly grateful for the lengths to which the County Council and its auditor have gone to help the children of Anne Arundel County," said schools Superintendent Kevin M. Maxwell. "Our school system is in a far better position today than it was a month ago, and this council deserves an immense amount of credit for that."

Budget Officer John Hammond said the school board's requested $77 million increase over this year was bloated; Leopold funded $26 million of that amount, a 5 percent increase. School officials had decried it as insufficient.

"It proves the validity of what the administration was saying earlier," Hammond said. "A good portion of the $51 million that the superintendent was lobbying for was unnecessary."

On the capital side, the council proposed close to $16 million in cuts, rejecting the $2 million plan to expand the Ordnance Road Detention Facility, and $1.2 million plan to build sidewalks on Harry S. Truman Parkway and $750,000 to build a trail from Gambrills to Millersville. The council also redirected $8.2 million in school textbook money into the school board's operating budget.

Hammond, the budget officer, said that strategy is bad fiscal policy.

"They are using one-time money to fund ongoing operating expenses," Hammond said, adding that such policies could hurt the county's bond rating. "They are in essence taking out their credit card and paying for this year with no plan to pay for it next year."

With the amendments, county teachers can now expect to receive the third straight year of raises. Administrators are scheduled to get 6 percent, while support staff like secretaries, cafeteria workers, bus drivers and custodians had forged contracts for 3 percent raises.

The council also put together enough money to fund feasibility studies for Belle Grove, Annapolis, Germantown, Folger McKinsey and Point Pleasant elementary schools and the Phoenix School in Annapolis.

The council also fully funded the district's $3.1 million request for 44 more teachers, paraprofessionals and therapists to serve students with special needs.

Roughly $1.9 million in the operating cuts came at the suggestion of Sutherland, who made recommendations on Monday.

Among those cuts were $485,000 from the Office of Central Services and $400,000 from the library system.

A large source of new funding, said council Chairwoman Cathleen M. Vitale, a Severna Park Republican, will come by eliminating turnover, or by calculating the total amount of money used in each department and cutting out the excess. She echoed Benoit's relief about not raising taxes.

"It's easy to do difficult things in good times, and more difficult to do good things in difficult times," said Councilman Daryl Jones, a Severn Democrat, "and that is what we have accomplished here today."

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