Baltimore County Executive Johnny Olszewski is remaining mum about whether he will call for tax hikes to deal with a projected $81 million shortfall. But others in county government are making the case that now may be the time to do so.
Let’s start with the county’s income tax rate.
Currently it’s at just over 2.8 percent. A report by the county council’s spending affordability committee lays out the possibility of raising that to 3.2 percent, which is the highest allowed under state law.
According to the report, that would bring in around $95 million a year, and would cost a county household making $75,000 a year an additional $23 a month.
County Council Chairman Tom Quirk, who also chairs that committee, said an income tax hike may be more palatable for county residents.
“Because with an income tax increase, it doesn’t affect, say for example, seniors on a fixed income like a property tax increase would,” Quirk said.
Add to that the fact that the county’s income tax rate has not been bumped up in 26 years, and that it’s lower than Baltimore City’s and all surrounding counties, with the exception of Anne Arundel. One more thing: about one-third of the state’s 24 localities, including Baltimore City, Howard, Prince George’s and Montgomery, have the highest possible rate of 3.2 percent.
As for property taxes, Daraius Irani, chief economist for the Regional Economic Studies Institute at Towson University, said you can make a pitch to raise them, since about 50 percent of the county’s budget goes to schools. Irani said a good school in your neighborhood likely increases the value of your home.
“It’s a fairly strong argument saying, ‘hey look, we’re going to invest in our schools and that’s going to indirectly invest in your property which will then go up,’” Irani said.
Meantime another report, this one prepared by the county executive’s Fiscal Sustainability Commission, makes a point of noting that neither the personal property nor income tax rate has been raised in decades.
Olszewski’s mantra on taxes has been the same since last year’s campaign: that everything is on the table.
“But I’ve also said that taxes should be a last resort,” Olszewski said. “We’re taking a thorough, deliberate review of top to bottom practices in Baltimore County.”
Irani said the county in the past was able to hold the line on tax rates because incomes and property values were rising.
“We’re reaching a point at which those increases will not be as fast as increases in expenditures,” Irani said.
Including having to pay for an ongoing school construction program that has cost more than one billion dollars.
So how is all of this tax talk going down with the three Republicans on the seven-member county council? David Marks for one, who represents Towson and Perry Hall, says he does not want taxes to go up. Marks said what will drive the debate over that will be the cost of schools. Marks said a key factor is whether Olszewski, who is a former delegate, is able to convince the state to grant his big ask: $100 million dollars annually for school construction for the next five years.
“If the county executive can use his relationship and increase the amount of money we get from the state to $100 million or more that’s going to help, big time,” Marks said.
There is also a proposal in the legislature to allow the county to charge developers impact fees. But Quirk sid that won’t fix it. Neither would raising the property tax a penny or slashing the school budget.
Quirk said, “This is something that will take a fundamental change, unless the state of Maryland comes riding to the rescue.”
The county will know whether that’s going to happen by the time Olszewski presents his budget to the county council in mid-April.