The County’s FY2020 Budget: Will the Tax Increases Be Worth It?
June 18, 2019,
The Anne Arundel County Council approved the FY2020 operating and capital budget last week. The operating budget is $1.7 billion which is a 6.7% spending increase over last year. The capital budget was $333 million with a majority of the funding going towards education-related projects. The Council voted 4 to 3, along party lines, to approve the budget which included a 3.6% increase of the property tax rate and a 1.24% increase of the county’s portion of the income tax rate.
The new expenditures in the budget will include an increase of $87 million for the Board of Education including 140 new classroom teachers, 50 special education positions, and 35 mental health positions. This is $46 million more than last year. On the public safety side, the budget will increase staffing with 50 new firefighters, fill 29 vacant police positions and add 10 new sworn officers.
During the County Executive’s “listening tour” in the spring, he heard that residents wanted better outcomes from the public education system and improved levels of public safety. The FY2020 budget indicates he heard what the residents wanted. He also indicated that a tax increase could be in the mix to help pay for these improvements. The focus on education and public safety is important since they are both major components of the outstanding quality of life in Anne Arundel County which helps it to be the “best place”. However, it must be noted that an increased tax rate can harm economic growth if not matched with measurable improvements in education and public safety. Tax increases must be approved and implemented with the utmost caution to ensure adequate public services and encourage economic growth which brings jobs.
Maryland already has a high tax rate which has proven to be a disincentive for business and recently retired baby boomers to stay in Maryland. This is causing an out-migration of companies and taxpaying retirees. In fact, noted economist Anirban Basu point this out at the Chamber’s Economic Outlook Lunch when he noted that the high personal tax and corporate tax rates have made Maryland less competitive as a place to live and do business in the region.
This is not a Republican or Democratic debate. It is a basic economic fact that businesses and individuals look closely at tax rates when deciding where to locate their business or live. Individuals are consumers and businesses are employers and we need both to make the local economy work. Any future tax of any kind must be closely scrutinized to ensure that Maryland can become more competitive in attracting and retaining companies and residents.