City taxes, fees projected to fall short of expectations
The package of taxes and fees crafted by Baltimore Mayor Stephanie Rawlings-Blake and City Council members to meet a budget deficit last year is estimated to fall short of projected revenues by nearly $17 million — more than a third of the income that it was expected to generate — city finance officials said Tuesday.
The city will receive $12 million less in income tax than officials had projected — most likely due to unemployment, officials said — and a controversial bottle tax is predicted to generate $1 million less than officials had expected, city budget director Andrew W. Kleine told council members at a hearing.
But Kleine said the drop in revenue will likely be offset by savings in other areas of the budget, particularly a hiring freeze that has left many positions open.
“I’m not ringing any alarm bells,” said Kleine. “We’re going to be able to balance the general fund budget.”
Rawlings-Blake raised parking fees and fines, slashed a discount for early property tax payments and boosted taxes on hotel stays, energy use and cell phone and land lines last year as part of an effort to generate $48 million in new revenue to help plug the city’s $121 million budget gap.
Kleine attributed the drop in income tax revenue in part to rising gas prices. Councilwoman Belinda Conaway, who chairs the budget committee, questioned him about Rawlings-Blake’s support for a higher state gas tax.
“In the short term, higher gas prices could reduce employment,” Kleine said. But he added that the higher gas tax was necessary for the state’s long-term financial health.
While higher parking meter fees are projected to bring in slightly more revenue than initial projections, increased parking taxes and parking fines are expected to fall substantially short. Kleine said parking appears to have decreased in Downtown Baltimore lots due to roadwork. The city is finishing $4.2 million in road projects to prepare for the Baltimore Grand Prix in September.
Two fees proposed by council members missed projections by a wide margin. Council President Bernard C. “Jack” Young pushed increases in the fines for public drunkeness, urination, spitting and other nuisance crimes, but the initiative is predicted to bring a little more than a quarter of the $220,000 projected.
Councilman Robert W. Curran pushed through fees for the video slot machines found in bars and convenience stores. Kleine said revenue figures were not available for the tax because the first payment was not due to the city until Feb.1. Only 600 of the devices have been registered with the city — far less than the 1,650 officials had predicted.
“They’re hiding them. They’re cheating us,” said Curran. “If they don’t want to give us $5 a day [in taxes], the hell with them. Let’s go after them.”
But Kleine said the finance department would focus enforcement efforts first on collecting the bottle tax. The collections unit has hired a consultant to scan through beverage distributors’ records to determine if they have been paying the 2-cent-per-bottle tariff, Kleine said. Collections agents will begin visiting retailers on Wednesday to study records, Kleine said.
Finance officials say the city is facing an $80 million deficit in the coming budget year. Rawlings-Blake is set to unveil her budget proposal on March 30.