The sagging real estate market is costing Baltimore City millions in lost tax revenues, according to preliminary estimates.
Halfway through the current fiscal year, budget analysts are predicting a $20 million to $30 million shortfall in receipts from recordation and transfer taxes ? revenues that played a key role in past city surpluses when the real estate market was booming.
“Best-case scenario is 20 percent off; the worst case is 30 percent,” said Councilman Robert Curran, a member of the city budget committee.
“Either way it?s a lot of money.”
Recordation and transfer taxes from real estate sales were projected to net the city $97 million in the current fiscal year.
The estimated shortfall could erase the roughly $20 million surplus projected for this fiscal year.
“It?s not pretty,” said Curran, D-District 3.
City Comptroller Joan Pratt went even further.
“There will be cuts in the next budget,” she said.
Added to the city?s woes is continued underbudgeting for police overtime ? the city has already spent $12.9 million through the first half of the fiscal year, exceeding the $8 million budgeted.
“We?ll have to make that up, depending on the final number,” Curran said.
Despite a recently announced hiring freeze imposed by Mayor Sheila Dixon, Curran said city staffing would not be cut.
“At this point, they?re not anticipating layoffs.”
One bright spot is the city?s share of state income tax.
“More people are taxpayers, rather then tax users, so we might see a slight uptick in income tax collections,” he said.
Last week Dixon said the city faced new challenges.
“We know the real estate market is struggling, and that is going to effect what we can do. It?s going to be a challenge,” she said.
Dixon spokesman Sterling Clifford said Tuesday that despite an overrun on overtime expenditures, spending was still down 22 percent this year.
“We?ve gotten better. Overtime has gone down, and we will have a more accurate picture going into next year?s budget,” Clifford said.
Curran expressed apprehension that rising expenses in the face of lagging revenues could change expectations.
“When I first came on the council in 1995, we were managing the city?s decline and then we managed growth during the real estate boom. Now I?m afraid we?ll be managing the decline again.”
