Claiming new residents with higher incomes will offset falling revenues from a decline in real estate sales, Baltimore City officials unveiled an aggressive 2009 spending plan Wednesday.
With slight increases in spending for city services and a large jump in capital spending, the 2009 plan will raise city expenditures by $250 million from 2008 ? nearly 10 percent ? for fiscal 2009, which starts July 1.
“Faced with extremely difficult market conditions and an uncertain future, my administration has drafted a judicious budget that carefully invests in the city?s top priorities, including our young people and homeowners,” Mayor Sheila Dixon said in a statement.
Most agencies ? including the police and fire departments ? received only slight increases in funding, while proposed capital spending jumped 30 percent, due in part to increased federal grants for water and sewer system improvements. But few if any agencies were slated for spending cuts.
Noticeably absent from the budget were any signs of projected surpluses that have bolstered city finances in the past.
And while revenues from sales of real estate were expected to decline by more than 30 percent in 2009, an estimated 11 percent increase in revenue from local income taxes ? due primarily to an influx of higher-income residents ? was expected to make up the deficit.
The preliminary budget plans were met with guarded skepticism by City Council members, who expressed relief that deep cuts were avoided but said they still had concerns that further cuts in state aid may be coming.
“I?m happy there are no jobs cuts,” said council member Jack “Bernard” Young, chairman of the budget committee.
“But I?m worried about any more cuts from the state that could make this budget even more difficult to balance.”
Aid from the state dropped slightly in 2009, but Young said more cuts could come if the state?s finances deteriorate.
Despite the current economic outlook, the five-year plan to lower property taxes by 2 cents per $100 of assessed value remained intact, netting the average city homeowner $30 in savings.
Officials cautioned that the budget was preliminary, and that further state cuts or continued declines of the real estate market could mean changes.
“This is definitely a preliminary budget,” said Sterling Clifford, spokesman for the mayor.
Officials also acknowledged the current 2008 budget will be tight, as recordation and transfer taxes continue to fall, dragged down by ongoing weakness in the real estate market.
“It?s extremely unlikely we will have a deficit,” Clifford said. “We probably come in even for the year.”
Clifford attributed a hiring freeze imposed by Dixon in November for keeping the city in the black.
