Mayor Rawlings-Blake Introduces Comprehensive Budget Plan
Mayor says plan will require “shared sacrifice” but will prevent a property tax increase and fund public safety, public education, essential city services
On her 67th day as Mayor of Baltimore, Stephanie Rawlings-Blake introduced a comprehensive plan to fix Baltimore’s devastating $121 million budget deficit without drastically cutting public safety and essential services or raising property taxes. The Comprehensive Plan would close the $121 million budget deficit with roughly $70 million in spending reductions (60%) and $50 million in new diversified revenue (40%) to fill critical service gaps in the Fiscal Year 2011 Preliminary Budget. The proposals require City Council approval.
Mayor Rawlings-Blake said the City is confronting the worst fiscal crisis in the City’s modern history. “This is not a drill. It’s real. And if we don’t fix this budget the right way, public safety and essential services are at risk. I will not let that happen,” she said. She noted the $121 million deficit is equal to half the police force, the entire firefighter force, or the combined General Fund budgets of Health, Housing, Recreation and Parks and Libraries.
Mayor Rawlings-Blake said in order to confront this crisis, “We need to do what families are doing everyday: be honest about what we can afford and focus funding on core priorities,” Mayor Rawlings-Blake said her Comprehensive Plan, if approved by the City Council, will “fully fund our obligation to public schools, maintain every single police officer and firefighter, keep libraries open and fund after-school programs that work without raising property taxes.”
For the first time this year, the City established a new “Outcome Budgeting” process in which City agencies competed for every dollar based on measurable results and efficiency. To preserve as much funding as possible for direct services to citizens, the budget also includes $36 million in general savings, by extending the Fiscal 2010 furlough plan, freezing pay increases, and implementing a new prescription drug employee cost-sharing plan.
“These savings ask much from our hard working City employees, but will prevent the abolishment of up to 700 positions,” Rawlings Blake said. The plan also includes another $35 million in tough efficiencies, agency consolidations and service reductions. “City Government must tighten its belt and get more value for every single tax dollar,” she said.
City Budget Director Andrew Kleine highlighted the primary drivers of the $121 million deficit, which include $54 million in lost revenue and $67 million in fixed cost growth:
- Highway User Revenue which funds road repair and resurfacing and other transportation services, is down more than$100 million (45%) since Fiscal 2007.
- Income Tax revenue has fallen nearly $31 million (12%) since its peak in Fiscal 2008. The City’s pension contributions and employee retiree health care costs have increased by $28.3 million and $23.3 million, respectively over last year.
Without some additional revenue, the City faces the prospect of closing seven fire companies, laying off sworn police officers, grounding police helicopters, shuttering dozens of recreation centers and swimming pools, cutting street repair and resurfacing, and abolishing 941 positions, 606 of them currently filled, to close the budget gap.
Mayor Rawlings-Blake outlined the objectives of The Comprehensive Plan to fix the $121 Million Deficit:
- Restore Critical Service Gaps: Public Safety, Infrastructure, Recreation and Health.
- Avoid Real Estate Tax increases on City homeowners and businesses.
- Balance the burden among residents, non -residents, businesses and non-profits.
- Provide citizens choices to avoid new taxes and promote environmental goals.
- Prevent up to 355 layoffs.
“We can cut government, make it more efficient, and demand and accept that all of us share the pain. A smarter, more efficient government and a diversified revenue stream will put Baltimore on sounder fiscal footing,” Mayor Rawlings-Blake said. Budget Director Andrew Kleine detailed the Comprehensive Plan to fill critical public safety and essential services gaps. The proposal includes:
- NO Property Tax Increase—the proposal protects City homeownership, redevelopment, and senior citizens on fixed incomes, and businesses that create jobs and wish to locate or remain in Baltimore. If approved, the new revenue in the Comprehensive Plan will prevent a 16 cent increase in the property tax rate or $50 Million in devastating service reductions.
- Four Cent Beverage Container Surcharge—the proposal exempts milk, juice, dairy substitutes and “economy size” containers 2 liters or larger in order to minimize burden on struggling families. It promotes the City’s environmental and sustainability goals by encouraging the use of refillable containers. With nonresident workers, tourists and other daily visitors who utilize City services also paying the surcharge, the proposal will generate an estimated $11.4 million.
- Exempt Property Bed Fee—the proposal is designed to charge only the largest nonprofit entities in the City that utilize core city services—police, fire, roads, lighting, other infrastructure—but do not pay property taxes. The 16 private colleges and hospitals impacted by the fee receive more than $10 billion in revenues annually and each year the City loses more than $120 million from nonprofit and tax exempt property. At 97 cents per day per bed, the proposal will generate $3.9 million to help fund core city services.
- Energy Tax—the proposal includes increases on commercial, residential and nonprofit energy users and because it is broad based, it is a stable source of revenue with minimal impact. The proposed increased levy on an average residential monthly utility bill of $239 is $0.60. The proposal generates $8.16 million, promotes energy conservation and the increase can be offset by turning a thermostat down by 1 degree.
- ‘Piggyback’ Income Tax—the proposal slightly increases the local income tax rate from 3.05% to 3.2%. The impact of the proposal for single median income earners ($36,894) in Baltimore is $48 a year or $1.84 a paycheck. Local income taxes are deductible on federal tax returns. At the same rate as Howard, Montgomery, and Prince George’s Counties (3.2%), the proposal will generate $5.9 million for the general fund in Fiscal 2011, 56% of which will be spent on Public Safety and Public Schools.
- Parking Tax—the proposal increases the City parking tax from 16% to 20% and is paid mostly by commuters living outside the City. The proposal encourages more use of mass transit and carpools, reducing road congestion and air pollution. At half of Pittsburgh’s rate (40%) and equal to Philadelphia’s rate (20%) the proposal will generate $5.08 million.
- Telecommunications Tax—the proposal increases the monthly telecommunication excise tax by 50 cents from $3.50 to $4.00 per line, and Centrex from 35 cents to 40 cents. The broad based tax is paid by residents, businesses and nonprofits and will generate $3.74 million for the general fund in FY2011.
- Hotel Tax—the proposal increases the occupancy rate from 7.5% to 10% and is primarily paid by visitors. Recently, the Hotel industry in Downtown Baltimore proposed a new surcharge to support tourism and this proposal would generate $2.6 million for Visit Baltimore to promote city tourism and conventions. At the same rate as Baltimore County (10%), this proposal would generate $3.9 million for the FY2011 City budget.
- Parking Meters—the proposal impacts five areas where street parking is in high demand: Fells Point, Harbor East, Downtown, Federal Hill and Mt. Vernon by increasing the hourly parking rate from $1 to $2 per hour. The proposal will make short term parking more available and “Smart Meters” have made payment easier. Both Philadelphia and Washington, DC have recently implemented similar measures, and this proposal will generate $3.1 million for Baltimore.
- Early Payment Property Tax Discount—the proposal reduces an early payment discount that was implemented in 1969 when the prime interest rate was 8.5% and city cash flow was challenged. Because of today’s low interest rates, the City loses 5.38% on the discount and most mortgage holders are already required to pay early. The proposal will generate $2.5 million.
- Parking Fines— the proposal increases fines by 20%, will generate an estimated $1.6 million and is avoided by simply following the law.
With $70 million in spending reductions and $50 million in new diversified revenue, the Comprehensive Plan will fully fund the City’s obligation to public schools, maintain every single police officer and firefighter, reduce fire company closures over the current fiscal year, keep all community libraries open and fund effective after-school programs.
In a letter to the City Council, released today, Mayor Rawlings-Blake outlined $41.5 million in critical services that will be restored by supplemental appropriations, if the City Council approves the Comprehensive Plan. The funding restorations will include:
Public Safety
- Fully restore all sworn police positions and maintain funding for the aviation, marine and mounted units. Fifty contractual positions are abolished. ($14.7 million)
- Restore all fire suppression positions and reduce rotating fire company closures from four in Fiscal 2010 to three in Fiscal 2011. ($7.6 million)
Recreation
- Restore funding for recreation centers to the Fiscal 2010 level. All centers will remain open through the summer while a long-term recreation center plan is developed. Current recreation center funding is not sufficient to provide appropriate staffing, programming and facilities at 55 locations. The goal of the long-term plan will be a smaller network of high-quality recreation centers that serve the entire City, with emphasis on neighborhoods with the highest concentrations of at-risk youth. ($5 million)
- Restore funding to open all swimming pools for six to seven weeks. ($719 thousand)
- Restore funding for youth football, lacrosse, track and field, boxing, tennis, golf and fishing. ($363 thousand)
- Restore funding for twice-a-week trash collection in the parks, regular playground maintenance and ball field preparation. ($1.5 million)
Infrastructure
- Restore funding to resurface 200 lane miles (65 more than Preliminary Plan) and maintain current 48 hour pothole repair lead time. These services are critical to fix the damage caused by the historic snowstorms. ($3.6 million)
Health
- Restore funding for seven school-based health centers ($1 million)
- Restore case management services for 5,400 clients through Baltimore Healthcare Access; addiction services for 85 homeless adults; and full funding for the Staying Alive drug overdose intervention and needle exchange programs. ($1.1 million)
- Restore the Senior Recreation Program ($350 thousand)
- Restore funding to the Fiscal 2010 level to maintain animal control officers and shelter services ($300 thousand)
Other Services
- Restore funding for vacant property demolition and stabilization. ($1.4 million)
- Restore Youthworks funding to the Fiscal 2010 level, adding 250 job placements to the Preliminary Plan level. ($370K)
- Restore bulk trash pickup. ($1.1 million)
- Restore 12 Special Traffic Enforcement Officers to cover special events and emergency needs. ($625 thousand)
- Restore senior center staffing. ($175 thousand)
- Restore 311 call center hours to the current level (6 am to 10 pm M-F and 10 hours/day on weekends). ($1 million)
- Restore public building maintenance. ($525 thousand)
Mayor Rawlings Blake wrote that the specific restorations will prevent up to 355 layoffs and she looks forward to “working with the City Council to determine how the additional $8 million of proposed revenue could be used most effectively,” if approved. “High on my list are important services that keep the City clean, including restoring graffiti removal crews, vacant property boarding and cleaning, mechanical street sweeping, and corner can collection, all of which are reduced in the Preliminary Plan,” Mayor Rawlings Blake wrote.
Mayor Rawlings-Blake said if the City Council approves the Comprehensive Plan, she can restore the most devastating cuts and the City can make progress on key issues without raising property taxes. “We can increase efforts to target Baltimore’s most violent and dangerous criminals, reduce gun violence and invest in smart crime-camera technology. We can reduce closures of fire companies to decrease response times.”
“We can fully fund our City’s obligation to public education and invest in innovative programs that have demonstrated success in improving our schools. We can keep our community libraries open and fund after school programs that work. We can improve our network of recreation centers,” Rawlings-Blake said.
Additional Information regarding the Mayor’s Comprehensive Budget Plan Can be found at: www.baltimorecity.gov keyword "Budget".
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