On the heels of an announced halt to the annual two-cent cut in Baltimore?s property tax rate, officials said Wednesday that more financial pain may be yet in store for the city.
The freeze ? which keeps the city?s property tax rate highest in the region at $2.26 per $100 of assessed value ? marks the end to three straight years of two-cent annual cuts bolstered by a string of healthy budget surpluses.
But with three months remaining in the current fiscal year, top finance officials said the city?s financial health is still precarious.
“We?re waiting right now to see how we did in March,” said Finance Director Edward Gallagher. “Then we?ll see if we need to do more.”
Causing much of the pain, Gallagher said, was a calamitous 30 percent drop in recordation and transfer taxes ? fees levied on real estate transactions.
The drop in such taxes combined with $28 million in cost overruns in police and fire department overtime have combined to put the squeeze on increased revenues from raising property tax assessments. Gallagher said the current trends may lead more cuts.
“We may have to pull in funds,” he said, referring to surpluses at city agencies that may be withdrawn to keep the city?s books balanced.
By law the city cannot run a deficit.
Despite the strains on finances, Mayor Sheila Dixon reiterated her pledge to find ways to lower the property tax rate in the future. She cited the recommendations of a blue ribbon tax panel that proposed a commuter tax and regional sales tax as a salve for the city?s fiscal dependence on property taxes.
“We?re still having discussions on it,” the mayor said.
But with many of the proposals requiring state action, Dixon said a slots parlor offered the best near-term solution.
“We need the slots money.”
Dixon instituted a hiring freeze in November and has stalled new spending.
But City Council Budget Chairman Bernard “Jack” Young said Baltimore needs to stay vigilant to continue funding youth-oriented programs.
“I don?t think we?re out of the woods yet,” he said. “We just can?t lose sight of our priorities for youth programs and summer jobs.”
