Email exchange between me and the Communist Mayor of Baltimore
As a student of finance with a Bachelor’s degree in Accounting, I can assure you that your plan to increase the cost of doing business in the city will not increase revenues as you claim below. In fact, they will decrease revenues just as Governor O’Malley’s millionaire’s tax did. You see, most people will try to get the most for their dollar and if they have to drive to Baltimore County in the case of the beverage tax; or leave the state in the case of the millionaire’s tax, they will. This means that not only will you not get the beverage tax, you will also lose out on the sales tax charged on any taxable items in the purchase. In addition to this loss, the owner will lose revenue from repeat customers and will be forced to lay off employees in the process. Because of that you will lose Baltimore’s share of the state income tax for the now terminated employees and the store. This may drive the store owner out of Baltimore City and possible the state thanks to the aforementioned millionaire’s tax. This will cause the city and state to lose all of the corporate taxes associated with a Maryland business, property taxes, et al and give the city yet another vacant building collecting dust. Those stores who stay in business with a reduces customer base will be forced to raise their taxes. The only people who will actually be hurt are those who cannot afford leave. So in reality, you are actually raising taxing those residents who are poor and living paycheck to paycheck.
If you really are concerned about helping the city become revitalized, perhaps you should talk to former NYC Mayor Rudi Giuliani who managed to revitalize a much bigger city that was is a similar situation some time ago. Or perhaps you can take a page from the President Regan/Milton Friedman economic strategy of lowering taxes in order to bring in businesses. It worked great in the 80’s; it will work great now. There is no reason why Baltimore, with its strategic location and storied history needs to be this close to the edge of despair but then again, they once said the same thing about Rome. The Caesars ignored the warning signs and the history, will you?
Also, why is it that Baltimore Mayors always decide to cut the police, fire department and other areas you are actually supposed to take care of, yet the parties seem to get bigger and bigger every year? Perhaps we need a mayor who understand what most families do. You first fund the necessities and if there is anything left over, then you fund the entertainment.
Bruce
Baltimore, MD
From: Mayor Stephanie Rawlings-Blake [mailto:mayor@baltimorecity.gov]
Sent: Wednesday, May 12, 2010 1:34 PM
To: BRUCE NOWAKOWSKI
Subject: RE: A new beverage tax hurts those who can least afford it
Dear Mr. Nowakowski:
Thank you for your email regarding Baltimore City’s Fiscal Year 2011 budget and the proposed beverage tax, which I shared with the Director of Finance and senior staff. I appreciate the concern you have for the future of our city, and I thank you for taking the time to share your concerns and suggestions with me. Your opinion is important to me, and I hope that you will carefully consider and support my Comprehensive Plan to address this unprecedented fiscal crisis. All public comments will be individually reviewed as we move through the annual budget process.
An Historic Challenge:
Together, we face the worst fiscal crisis in the City’s modern history. Due to the Great Recession, our revenues have been hit hard while costs continue to grow. The gap between the cost of maintaining services and our expected revenue is an unprecedented $121 million.
$121 million is equal to half of the police force, the entire firefighter force, or the combined budgets of Health, Housing, Libraries, and Recreation & Parks. It is equal to a 36 cent increase in the property tax rate. If we don’t act to reform Police and Fire Pensions, the deficit will explode to $185 million. The City’s major revenue declines and cost increases include:
- Highway User Revenue (HUR), which funds road repair and resurfacing, is down more than $100 million (45%) since Fiscal 2007, including $60 million taken by the State to balance its Fiscal 2010 and 2011 budgets.
- Income Tax revenue has fallen nearly $31 million (12%) since its peak in Fiscal 2008 due to continued high unemployment.
- The City’s pension contributions and employee retiree healthcare costs have increased by $28.3 million and $23.3 million, respectively, over last year. Without legislation to reform the Fire and Police Retirement System, pension costs alone would grow by another $64 million.
Cutting Costs First:
In order to confront this fiscal crisis, we need to do what families are doing everyday: be realistic and honest about what we can afford and focus funding on core services that produce results. City government must tighten its belt and get more value for every single tax dollar. I started this process first by cutting the Mayor’s Office Budget by more than 10%, including a 13% reduction in salary expenditures.
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. Outcome Budgeting promotes innovation and accountability. Priority is given to targeted, evidence-based services.
To preserve as much funding as possible for direct services to citizens, my budget will include $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 hardworking City employees, but will prevent the abolishment of up to 700 positions.
Making Tough Choices:
Even after tightening our belt, 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, slashing street repair and resurfacing, and abolishing 941 positions, 606 of them currently filled, according to the Preliminary Budget.
Some of the cuts we would be forced to make are simply unacceptable, especially those to police, fire, recreation, infrastructure, and health. We didn’t create this problem, but we have to solve it and do what is right for Baltimore.
A Way Forward:
To address this historic crisis, I developed a Comprehensive Plan to balance the City’s budget without drastically cutting essential city 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 outlined in the Fiscal Year 2011 Preliminary Budget. The Comprehensive Plan, including individual revenue proposals, requires City Council approval.
The primary objectives of the Comprehensive Plan are:
- Restore critical service gaps in 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.
The Comprehensive Plan will balance the City's budget, fully fund our obligation to public schools, maintain every single police officer and firefighter, reduce fire company closures, keep all community libraries open, and fund afterschool programs. A smarter, more efficient government and a diversified revenue stream will put Baltimore on sounder fiscal footing for years to come.
If all of the measures I am proposing are approved by the City Council, the following critical services that are currently underfunded in the Preliminary Budget will be restored by supplemental appropriations, with public safety, recreation, infrastructure, and health receiving top priority:
Public Safety
- Fully restore sworn police positions and maintain funding for the aviation, marine, and mounted units.
- Restore all fire suppression positions and reduce rotating fire company closures from four in Fiscal 2010 to three in Fiscal 2011.
Infrastructure
- Restore funding to resurface 200 lane miles (65 more than Preliminary Plan) and maintain the current 48-hour pothole repair lead time. These services are critical to fix the damage caused by the historic snowstorms.
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.
- Restore funding to open all swimming pools for six to seven weeks.
- Restore funding for twice-a-week trash collection in the parks, regular playground maintenance, and ball field preparation.
- Restore funding for youth football, lacrosse, track and field, boxing, tennis, golf, and fishing.
Health
- Restore funding for seven school-based health centers.
- 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.
- Restore the Senior Recreation Program.
- Restore funding to the Fiscal 2010 level to maintain animal control officers and shelter services.
Other Services
- Restore funding for vacant property demolition and stabilization.
- Restore Youthworks funding to the Fiscal 2010 level, adding 250 job placements to the Preliminary Plan level.
- Restore bulk trash pickup.
- Restore 12 Special Traffic Enforcement Officers to cover special events and emergency needs.
- Restore senior center staffing.
- Restore 311 call center hours to the current level.
- Restore public building maintenance.
These specific restorations total approximately $41.5 million and prevent up to 355 layoffs. I look forward to working with the City Council to determine how the additional $8 million in proposed revenue could be used most effectively. 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 trash can collection, all of which are reduced in the Preliminary Budget.
Be Part of the Process:
Just like any family, a financial crisis of this magnitude has the power to rip us apart or bring us closer together. We must choose the constructive path of working together to fill these critical gaps in services to do what is necessary for our great city. Please work with me to address this unprecedented challenge.
The Comprehensive Plan requires City Council approval, and I need your support to protect our priorities and do what is right for Baltimore. Please contact your City Council member to share your thoughts as the budget process continues.
Visit www.baltimorecitycouncil.com to obtain the contact information for your City Council representative. All detailed budget documents are posted online at www.baltimorecity.gov.
Moving Baltimore Forward:
If the City Council approves the Comprehensive Plan, Baltimore can continue to make progress on core priorities, including public safety and public education, 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. We can keep our community libraries open and fund afterschool programs that work. We can improve our network of recreation centers.
I've had the great honor of serving as mayor of Baltimore for just a few short months, and despite this unprecedented fiscal crisis, I know that Baltimore's best days are ahead. Baltimore will not be defined by crisis and cuts. We won't allow it. Instead, we will be defined by how we confront this crisis together, with honesty and shared sacrifice, so that our city can emerge better, safer, and stronger.
Sincerely,
Stephanie Rawlings-Blake
Mayor
City of Baltimore
