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Md. budget to increase city deficit

January 27, 2003|By SCOTT BUTKI

scottb@herald-mail.com

Maryland Gov. Robert Ehrlich's proposed budget would cost Hagerstown nearly $700,000 in lost revenue and a new administrative fee, increasing the city's projected budget shortfall for the next fiscal year to about $2 million, Finance Director Alfred Martin said Friday.

Ehrlich is proposing an $841,316 reduction in the amount of Municipal Highway User Revenues the state gives to Washington County's municipalities. Hagerstown, which receives about 74 percent of the revenue, stands to lose about $640,000, Martin said. That represents a cut of about 34 percent from the $1.9 million the city now receives, he said.

Under Ehrlich's proposal, the state would also begin charging an administrative service fee for property tax assessment services provided to local governments, Martin said. He estimated the cost to Hagerstown would be about $45,000.

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Earlier this month, Martin estimated the shortfall for fiscal 2003, which starts July 1, would be at least $1.25 million.

At a Jan. 14 meeting, the Hagerstown City Council grappled with ways to increase city revenue, including asking nonprofit agencies to voluntarily contribute half of what they would pay if they were not tax-exempt.

About 21 percent of the tax base in the city is tax-exempt, Martin said.

The council also asked Martin to explore the benefits of imposing an impact fee on new homes, with the proceeds going to firefighting and police expenses.

Hagerstown Mayor William M. Breichner has said he thinks the city will have to raise taxes again this year to balance the budget.

To balance the current fiscal year's budget, the city increased real estate and business property tax rates, trash fees and water and sewer rates.

Before the council adopted a $25.57 million budget in June, the Finance Department estimated the city would face a $678,368 shortfall for fiscal 2003.

The financial situation has worsened because revenue from city personal property tax and state income tax have been less than estimated, among other factors.

The city also will look at other ways to increase revenue and decrease spending.

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