“Increases in property tax rates, cutbacks in local service provision, elimination of local road projects and reduction in workforce are the sole options left to municipalities to offset this devastating loss of general fund revenues…”

FROSTBURG – Stung by funding cuts that have averaged 75 percent for municipalities in the state, the Frostburg City Council last week joined cities and towns across Maryland in petitioning the Governor and General Assembly to either restore those funding reductions, or give towns and cities expanded taxing authority to make up the difference through new revenue streams.

In a best case scenario offered up by the municipalities, state government would do both.

Working from a model provided by the Maryland Municipal League, which endorsed a similar measure at its June Ocean City convention, the Council passed a resolution that begins by noting, “Whereas the state has slashed vital state-shared revenues historically provided to municipal governments on average, by more than 75 percent for this current fiscal year, and by more than 90 percent for many municipalities.”

Setting forth its cause in a litany of “whereas…” assertions, the resolution continues to note the dire consequences that could befall local governments, and their citizens, if the funding is not restored:

“Increases in property tax rates, cutbacks in local service provision, elimination of local road projects and reduction in workforce are the sole options left to municipalities to offset this devastating loss of general fund revenues…”

In the next line, the resolution follows MML’s second tack in pursuing relief from the state cuts. Recognizing the dire financial shape of the state budget, and the likelihood that those cuts will not be restored, municipalities are seeking broader taxing authority that would allow local government to rely on an array of revenue streams, as opposed to the property tax, its main current source of funding.

“Municipalities’ extremely narrow taxing authority prevents them from raising alternative funds to lost highway user revenues and police aid that have been diverted to balance the state’s general fund,” the resolution notes.

A packet provided by the city included a one-page fact sheet issued by MML, which includes an image of a tool box and a list of “revenue tool options” – i.e., new taxes – that could provide municipalities with the funding needed to maintain current levels of service. The list also includes an admonition for the General Assembly to refrain from imposing “unfunded mandates” that require local spending, but don’t provide any state funding to cover it.

Tax options number more than a half dozen and include a local option tax, a municipal recordation tax, a building excise tax, an energy consumption tax, a local restaurant tax and a municipal transfer tax. Also mentioned are a hotel motel tax Allegany County already has, and lifting of a cap on the admissions and amusement tax.

In outlining such politically painful options, the fact sheet notes the services provided at the local level, and relied upon by the citizen-constituents of delegate, senator and governor: “Maryland cities and towns provide essential, quality-of-life services such as water and sewer, police protection, trash removal, streetlights and parks and recreation.”

Through the resolution, MML and the city of Frostburg seek a more flexible and expanded arsenal of tax options to maintain such services in a virtually unprecedented era of devastating, trickle-down funding reductions.

“Municipalities, more than any other form of government in Maryland, rely most heavily on the property tax,” the fact-sheet states, noting that the average municipal budget derives 60 percent of its revenue from property taxes.

“Whereas this issue is of significant importance to the city of Frostburg, and it is critical that the administration and the Maryland General Assembly take actions needed to rectify this serious problem…,” the resolution concludes. “Now therefore be it resolved that the Frostburg Mayor and City Council do hereby urge the administration for this coming and future fiscal years, to submit a budget document to the General Assembly reinstating to municipal governments full funding for highway user revenues and state aid for police protection, and that the Maryland General Assembly enact and the Governor sign into law enabling legislation to broaden the authority of incorporated municipalities to raise own-source revenues to reduce the reliance of cities and towns on the property tax to fund government sources.”

Amen.