Baltimore’s finances will continue to suffer due to the coronavirus pandemic, city officials said Wednesday as they rolled out a preliminary budget for the fiscal year that begins July 1.
The $3.6 billion spending plan represents “all-time lows” in revenue from parking, hotel taxes and the Baltimore Convention Center, sectors that have been decimated by the pandemic. And officials expect some revenue streams, particularly parking, will never rebound if working from home remains prevalent.
Federal aid provided a “lifeline” to the city during the pandemic, officials said Wednesday, offsetting many of the costs Baltimore incurred. About $103 million was received through the federal Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, passed last year — of which $24.5 million will be carried forward for hospital spending. 2022. An additional $670.3 million is expected to be delivered by the US bailout package, signed into law last month, though that money has yet to be accounted for in the proposed budget.
City officials are also hoping for reimbursement of millions more from the Federal Emergency Management Agency.
But revenue continues to lag, below already significantly reduced projections for fiscal year 2021, which ends June 30. Budget officials told members of the Baltimore City Council Ways and Means Committee in February that the city expects to end the year with a million-dollar deficit.
“It will be a modest growth budget, but that is where we are basing it on the economy and the slowdown in the pandemic and the long period of time it will take for recovery,” said Henry Raymond, the director. of the city’s finances, during a press conference. briefing on Wednesday.
The new spending plan, which must be reviewed by City Council and approved by the Estimates Committee, maintains the property and income tax line but includes a 911 fee increase of 25 cents per phone line. The increase is necessary, city officials say, to fund a transition to Next Generation 911 technology. This includes secure calling networks, better call routing and integrating call location data into emergency dispatch systems.
Unlike last year’s spending plan, the proposed budget does not include any layoffs or furloughs for city employees.
The proposed budget is the first proposed by Democratic Mayor Brandon Scott, who took office in December. Raymond presented it to the Board of Estimates on Wednesday.
Although Scott led a charge last year when he was city council president to cut police spending, the department’s budget would increase by $28 million, or about 5%, under his budget plan. for 2022. City finance officials attributed the increase to pension health increases. child care and workers’ compensation costs for the department.
Last year, the city council cut $22.4 million from the budget proposed by then-mayor Bernard C. “Jack” Young, with the majority coming from police spending. The council intended to redirect the savings to community enrichment efforts, but the Democratic mayor refused to reallocate the money. Instead, it became a surplus for the 2022 budget.
Scott said Wednesday he remains committed to long-term police spending reform. In a statement, he said he will move forward with the creation of a task force, including political and community representatives, to develop a five-year budget reduction plan for the police department.
“As my administration works tirelessly to reinvent policing in Baltimore, we must ensure that the city’s resources are used effectively and efficiently,” he said. “The task force will be tasked with identifying reductions that can be responsibly made over time, while creating a plan that diverts appropriate service requests so officers can focus their efforts on reducing violent crime. .”
At the press conference, Raymond said Scott’s budget plan assumes a “moderate” pandemic recovery in fiscal year 2022 and assumes no further COVID-related disruptions or shutdowns. .
Sources of income that depend on tourists and commuters have been hardest hit by measures to control the spread of the disease. Baltimore’s projected budget forecasts $13.9 million in parking revenue next year, less than half of what the city earned before the pandemic. Hotel tax revenue is projected at $19.6 million in 2022, down 8% from the current fiscal year, for which expectations have already been lowered.
The reassessment of city properties, a tool to increase property tax revenue, has also been hampered by the pandemic, especially on commercial land, Raymond said. South Baltimore properties were re-evaluated for Budget 2022 and overall value growth was 3.6%. Residential properties in the area increased in value by 6.5%, but commercial properties rose only 0.9%, he said.
“Commercial properties have been dragged down specifically due to the COVID environment,” Raymond said. “We are talking about retail businesses, hotels and other business establishments that have been negatively impacted by the pandemic. As the economy recovers, valuations will recover. But this will take time. »
The unusual circumstances presented by the pandemic have been a boon to a few sectors of the city budget. Revenue from traffic cameras has increased significantly as drivers have taken advantage of less congested city roads. Baltimore expects to earn $21 million in fiscal 2022 from red light and speed camera fines. More than $24 million is expected to flow into city coffers for fiscal 2021.
Increased pandemic spending is expected to continue over the next year, including $10 million budgeted for mass vaccination sites — though city finance officials expect this cost is reimbursable by FEMA. A rent relief and eviction prevention program is also expected to continue through fiscal 2022 as part of the spending plan.
Scott offered a one-time $6.7 million loan to Visit Baltimore to stabilize the tourism organization’s budget. The nonprofit, funded by hotel taxes and state dollars, has been hit hard by the pandemic. The group is expected to repay the loan over five years as hotel tax revenue recovers.
Scott’s spending plan includes only limited new initiatives amid the revenue squeeze, but he proposes leveraging funding from private groups to fund several quality-of-life and crime-fighting initiatives. For example, a recycling box should be provided to every home in the city with $8.3 million from a private grant and an interest-free loan, city officials said. Another private funding of $600,000 would be used to fund the creation of a group violence reduction strategy. This plan would expand opportunities for at-risk populations and attempt to foster better relationships between police officers and the communities they serve.
The proposed budget also calls for the sale of three city-owned properties in the hope of raising $15 million. City officials did not specify which properties might be for sale.
Democratic City Council Speaker Nick Mosby said Wednesday that the budget proposal would undergo “rigorous” review by the council.
“We will hear from the agencies, ask the tough questions, dig deep into the facts and data, hear from the residents, and ultimately pass a budget that is fiscally responsible and delivers the quality of service Baltimoreans deserve and should expect,” Mosby tweeted Wednesday. .
He declined to comment further.
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Baltimore must pass a budget by June 24. The Board of Estimates is due to vote on the plan on May 12 and it is expected to be presented to city council on May 17.
Councilor Eric Costello, chair of the council’s ways and means committee, said the budget appears to be a responsible plan.
“I think there are obviously significant revenue declines expected due to COVID, but there is also strong federal and state support,” he said.
Costello said he was happy to see funding in the plan for the city’s graffiti removal efforts. Service was not offered for much of the pandemic as public works workers focused on garbage removal.
In addition to offering projections for the upcoming fiscal year, Baltimore finance officials also flagged several potential challenges the city can expect to face in the near future on Wednesday.
One issue involves the city’s Hilton Convention Center hotel, which was funded in 2006 with $300 million in bonds. Repayment of bonds is usually made with hotel operating revenue, hotel taxes and property tax revenue generated by the hotel. But the hotel has been closed for a year, resulting in a shortfall in these revenues. The bond agreements for the deal require the city to pay up to $7 million in hotel tax revenue for the bonds when other revenue is insufficient. Scott’s projected budget for 2022 includes $7 million for the coming year, officials said.
Baltimore is also preparing for additional spending in 2023 thanks to education reform legislation passed at the state level. Known as the Kirwan Bill, the law calls for increased contributions to schools. Baltimore expects to pay $63 million more in 2023.