City budget analysts say the tax hikes, fee increases and other revenue enhancement measures adopted last year to fill the city’s multi-million budget gap have failed to stream in $16.8 million in anticipated cash.
The 13 measures, including income and parking tax increases and a contentious bottle levy, were expected to bring in $48 million over the course of the fiscal year.
At an informational hearing at City Hall last week, Baltimore budget chief Andrew Kleine said the numbers reflect a city with a high unemployment rate and poor tax enforcements. His findings are based on the city’s cash intake as of January.
The income tax rate — which increased from 3.05 percent to 3.20 percent two months ago—has generated $12 million less than projected, and despite a 4 percent increase in parking taxes, the city is $2 million behind estimates.
Kleine hinted that the newly launched Charm City Circulator, which buses residents around downtown free of charge, has caused the city to lose out on potential parking tax and fine revenue, as fewer people opt to drive.
“One of our hopes was that the circulator would keep some cars off the street and it appears its having that kind of effect,” he said slyly.
High gas prices are also seemingly stifling revenue projections. “When people stop traveling and spending, that affects jobs in the city,” said Kleine.
His statement prompted council budget and appropriations co-chair Belinda Conaway, D-7, to question the analyst. “Are you sure you should say that?” she asked, noting that the mayor supported the gasoline tax.
“The fact is,” Kleine said, “in the short term, higher gas prices, especially in this economy, could affect jobs.”
Revenue from the beverage tax, which mandates grocers to charge an additional 2 cents for most drinks, is short $1 million. Kleine said his department began “enforcement actions” after they found many distributers had failed to enact the levy.
The city must also take more steps to ensure owners of simulated slot machine register their devices, he said. Only half of the 1,600 machines in Baltimore were registered as of Feb. 1.
Payments from civil citations were expected to bring in $170,000 but only generated $30,625. Finance officials assume that a lag between when citations are issued and when they are paid has outdated their figures.
Councilman Robert Curran, D-3, asked why the $16 million in revenue generated from red light and speed camera enforcements weren’t included in the enhancement measures. Kleine said that unlike the other fees that stream into the general fund, the money from speed fines filter into the motor vehicle fund.
The finance department recorded $830,000 shortfalls in new vacant registration fees, and a $208,000 underperformance in energy taxes.
Only hotel taxes were on schedule to gross $25.5 million, and telecommunication taxes were set to surpass the $3.7 million estimate.
Despite the shortfall in projections, Kleine anticipates the city will fill the $9 million to $14 million budget gap that remains in the general fund without tapping into the emergency budget stabilization account, chiefly in part to money saved from the city hiring freeze.
Finance officials will release third quarter projections for revenue enhancements in coming weeks, and Mayor Stephanie Rawlings-Blake is set to unveil the 2012 budget later this month.