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Budget deficit may result in tax increase

February 02, 2001

Budget deficit may result in tax increase



By DAN KULIN / Staff Writer


Hagerstown Mayor Robert E. Bruchey II said Friday that a city tax increase is likely in the coming fiscal year. But City Council members say it's too early to tell whether there will be a tax hike.

Also, council members directed City Finance Director Al Martin to look into the possibility of charging for city Fire Department responses.

Councilman Lewis C. Metzner, who raised the issue, said he only wants to charge for fire responses if they can make sure that only insurance companies end up paying the bill and citizens don't have to pay any such charge.

During a budget retreat Friday morning, the Mayor and council learned of a projected $647,000 deficit in the city's $23.8 million general fund for the fiscal year beginning July 1.

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"We may need to consider an increase to the property tax rate," Martin told the council.

The council instructed Martin and City Administrator Bruce Zimmerman to look for other ways to raise money or cut expenses, but Mayor Bruchey said it looks like a tax increase will be necessary.

"I don't see any way around it," Bruchey said. "How can you find $645,000?"

Metzner said he doesn't know whether a tax increase will be passed by the council, but he said one will be needed if the council agrees to subsidize Community Rescue Service. CRS, the ambulance company serving most of Hagerstown, is asking for a $400,000 annual subsidy from the city.

"I would not be shocked if we got a recommendation for raising taxes," Metzner said, adding, "There's not a politician in the world who wants to raise taxes. And even less in an election year."

Councilwoman Susan Saum-Wicklein said a tax hike will "at least have to be considered," but she said it's too soon to say whether it will happen.

Councilman William M. Breichner said it's "premature" to say whether taxes will be raised. "There's usually a moratorium on tax increases in election years," he added.

Councilman Alfred W. Boyer said "there are too many unknowns right now."

Councilman J. Wallace McClure said it's "too soon in the game to know right now."

Zimmerman, who is responsible for submitting a proposed budget to the Mayor and council by March 31, also said it is too early to predict whether he will recommend a tax increase.

Zimmerman said the projected deficit is caused by city expenses growing faster than city revenues.

According to city documents distributed Friday, the budget is being hit by increases in employee wages, fringe benefits and workers compensation. Also, the city is expecting the amount it receives from the Washington County government in its annual tax setoff to decrease by about $80,000.

Martin said the projected deficit is on a budget that does not include any cost of living wage increases for city employees. The projected budget does include money for employee step and longevity raises.

A new state law has changed the way the real estate tax rate is calculated for the upcoming fiscal year. In the past, real estate taxes were assessed on 40 percent of the estimated value of the property. But now the taxes are being assessed on 100 percent of the estimated value.

To make the change have no impact on the amount of money paid by property owners, the city's tax rate is now considered to be 69.2 cents per $100 of assessed value. The rate was $1.73 per $100 of assessed value.

The business property tax rate remains $1.73 per $100 of assessed value, because that tax was already assessed on 100 percent of the estimated value.

Martin assured the council that the new rate will not change the amount paid by property owners.

Metzner suggested Martin look into creating a special tax for blighted properties.

Councilman Alfred W. Boyer asked Martin and Zimmerman to go to all department heads and ask them to look for ways to cut expenses.

Councilman William M. Breichner said city departments typically ask for more staff, and said the Fire Department is expected to ask for more firefighters.

Also, Saum-Wicklein suggested the new budget include some money for expenses related to the planned University System of Maryland Hagerstown Education Center.

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