Taxing Times for County Budgets

Chiefs of Montgomery, Prince George's Wary Of Fragile Economy

The leaders of Maryland's two largest Washington suburbs, facing a sinking economy and slumping housing sales, yesterday proposed raising taxes and trimming spending to balance local budgets while protecting what they say are critical public services.

Montgomery County Executive Isiah Leggett (D) recommended the largest property tax increase in two decades, the elimination of 225 government jobs and a new ambulance fee to close a projected $297 million shortfall. In Prince George's, County Executive Jack B. Johnson (D) proposed raising local taxes on income and real estate transactions to close an estimated $121.6 million gap.

Local governments throughout the region, heavily dependent on property taxes and accustomed to rising revenue in recent years, are trying to cope with similar pressures. In the District, for example, financial officials have projected a $96 million budget gap, and Mayor Adrian M. Fenty (D) is considering a change in a recent commercial property tax cut. Fairfax County's proposed budget had not even returned from the printers last month before plummeting revenue estimates had to be revised downward again. The Fairfax plan keeps school spending at current levels and cuts pay raises for public safety workers.

Leggett's $4.3 billion spending plan, which must be approved by the County Council, would increase spending by 3.9 percent -- the smallest increase in 12 years. Funding for Montgomery's public schools would rise by nearly 4 percent but come in $51 million short of the school system's request. Superintendent Jerry D. Weast predicted "significant detrimental effects on classrooms" and layoffs.

Leggett called for closing the estimated shortfall through a combination of new revenue; $155 million in trims to police, fire and health and human services; and changes to the way the county pays health-care costs for retired employees.

Residents would pay more for public parking lots in Wheaton and Silver Spring, leaf collection, Ride On bus passes, annual swimming pool passes and after-school programs at community centers.

To stave off deeper cuts, Leggett said, it was "absolutely necessary" to raise Montgomery's property tax rate on average 8 percent, or 7.5 cents, the largest increase since 1988.

"It's something I really did not want to do, but something we have to do," Leggett told the County Council, which would have to vote to raise the property tax above the limit allowed in the county's charter.

Leggett would provide the largest-ever credit of $1,014 for primary residences to offset the hit to homeowners. The bill for a median-priced home of $343,200 would increase 6.2 percent, or $138, to $2,342. Under the charter limit, bills are allowed to rise 3.6 percent, or $80, for the median home.

The credit essentially shifts more of the tax burden from homeowners to commercial and residential rental properties. The bill for a commercial property assessed at $2.8 million, the county median, would rise 20.7 percent or $4,726 to $27,580.

Leggett's cuts would slow plans to expand a health insurance program for low-income residents and reduce subsidies for child care and in-home care for seniors and disabled residents.

At the police department, Leggett would eliminate a class of new recruits and 22 positions by getting rid of the Community Services Division, which works on crime prevention. Council President Michael Knapp (D-Upcounty) expressed skepticism that the public safety cuts would pass, calling them "pretty much non-starters."