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Annapolis Increases Taxes

| May 25, 2011, 04:41 PM | 18 Comments

UPDATE: We corrected the tax increase to 5.66%. The original 3% was a mis-read on our part.

After a contentious meeting at City Hall on Monday, Annapolis Mayor, Joshua Cohen is now calling for significant tax increases and a reduction in spending in his proposed budget.

Approximately 300 citizens attended Monday’s meeting wearing red shirts to send a signal to the Council that the City is swimming in debt. The Annapolis Sound has some excellent video coverage of the meeting. In addition, the City’s Financial Advisory Commission presented their report which essentially told the City that they could not fiscally survive on the proposed budget.

The commission has recommended that the City Council use an equal percentage of spending reductions and property tax increases to address the City’s current and impending financial challenges. The commission estimates this amount to range between approximately $6.5 million and $7.76 million dollars.

–Annapolis Financial Planning Commission Report

Annapolis has been plagued by fiscal “irregularities” over the past year. Last year, $150,000 was stolen from the Finance Department’s office, the City ran out of cash to meet obligations and required a one time loan that has now turned into an annual event. And most recently, Finance Director Bruce Miller and City Manager Mike Mallinoff announced that they were unaware of approximately $4 million in additional debt the City owes prior to June 30, 2011.

The Mayor campaigned on a platform of not raising taxes and it now appears that he may be following in the footsteps of George HW Bush.  Mayor Cohen has also resisted cutting staff or spending for the bloated City. While he did lay off a few employees last year, most were hired back and the employee count (according to City Hall testimony on Monday) now exceeds 700 people.

During today’s press conference (video) the mayor announced a 3% 5.66% tax increase along with $2.8 million in cuts to his proposed budget  Most of the cuts come from salaries and are across all departments. However, these are either vacant positions or positions created under the original proposed budget. The Mayor stressed that no current employee would lose their job.

In terms of hard spending cuts, some departments will see cuts in contract labor. Additionally the City will save $100,000 by consolidating fleet maintenance on their vehicles.

Mayor Cohen also announced that a proposed trash fee was being tabled for further investigation and potential savings and that Alderman Pfeiffer was taking a leave of absence from the Finance Committee and will be replaced by Alderman Arnett. The Mayor also addressed the unanticipated $4 million expenses that are due and said that it was “unacceptable” yet lauded the Finance Department for their hard work in migrating the system to current standards.

While the proposed revisions are a step in the right direction, on paper, they do not seem to be enough. The Financial Advisory Committee projected a deficit in excess of $7 million, yet these changes (cuts and tax increases) only account for $4.7 of it. Alderman Ross Arnett agreed that this was a start and not the end.

Category: NEWS, OPINION, POLITICAL NEWS

About the Author - John Frenaye

John is the publisher and editor of Eye On Annapolis. As a resident and business owner in Anne Arundel County for nearly 25 years, he realized that there was something missing in terms of community news–and Eye On Annapolis was born in late spring 2009.

John’s background is in the travel industry as a business owner, industry speaker, and travel writer. In terms of blogging and social media, he cut his teeth with MSNBC.com.

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Comments (18)

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  1. sickofpaying says:

    Can you impeach a Mayor? That’s really what we need to do here. Mayor Cohen does NOT know how to run this City and I for one am sick of paying for it. I am sure my house will be on the market with many who are ready to move instead of suffer more of this piss poor leadership.

  2. Bob McWilliams says:

    It’s really astonishing that their reason for raising taxes is because they incompetently didn’t know about $4,000,000 in expenses. The arrogance of that is just off the charts.

  3. KStewart says:

    Other than rough figures, there wasn’t a lot of helpful information provided here. Now the real tough questions need to be asked – such as how are we going to cut another $10 million, and what effect are these cuts going to really have on City services.

    http://bit.ly/cohentaxincrease

  4. Kyle,
    The City is seeking $10 million in additional short-term borrowing (through tax-anticipation notes), but that does not necessitate that we make additional cuts that equal that amount. Our borrowing is based on our cash-flow needs. If the proposed budget accord is adopted, the revised FY 2012 budget would increase the City’s fund balance by $13 million. That infusion would significantly boost the City’s cash reserves and greatly reduce the need for short-term borrowing in future years.

    Phill McGowan
    Public Information Officer
    City of Annapolis

  5. KStewart says:

    Hey, Phil.

    Correct me if I’m wrong, but the Council’s “fiscal hawk” Ross Arnett said that Finance Director Bruce Miller asserted the need for the City to either find an additional $10 million in revenue or cuts to get our finances headed in the right direction.

    True or false?

  6. Citing Finance Director Bruce Miller, Alderman Arnett made the following statement at the news conference: “To reach a level of comfort, we need to find about $15 million.” (On the Annapolis Sound recording, the statement is made at about 17:20.) That comment is in reference to the needed size of our fund balance. Yes, the City will be on solid financial footing at $15 million in fund balance. If the budget agreement reached by the Mayor and the council is incorporated into the FY 2012 budget, the City will end the next fiscal year with $13 million in fund balance.

  7. Bob McWilliams says:

    Phill:

    I presume there will be another public hearing as required by law. When will that be scheduled?

  8. Yes, there is a required public hearing on the proposed 3-cent property tax increase. That hearing will be held at 7 p.m. Monday, June 6 at the City Council Chambers, 160 Duke of Gloucester St.

  9. Bob McWilliams says:

    Phill:

    Won’t there be a hearing on the $2.8 million in cuts? The Mayor will need to have those specifically detailed, before the budget can be passed. Otherwise, it’s all just a bunch of talk.

  10. You make a good point on the cuts. Here’s what I know right now:

    Much of the proposed $2.8 million in spending cuts would be achieved through a hiring freeze. The administration has agreed to set aside a contingent reserve to fill only essential vacant positions in FY 2012. Final approval on all hires would be required from the Finance Committee and the full City Council. It’s important to know that more than 100 City positions become vacant a year because of attrition — that’s why this proposed savings is possible. The administration estimates $600,000 in savings alone from the Police and Fire departments.

    The cuts also include:
    – Delaying by nine month the conversion of 21 contractual workers to exempt or civil service status ($265,000)
    – Consolidating fleet maintenance operations ($100,000)
    – Instituting health insurance cost controls ($100,000)
    – Freezing the open Assistant City Attorney position ($100,000)
    – Eliminating $50,000 from the budget for the Annapolis Economic Development Corp.
    – Eliminating the GIS coordinator position in Planning and Zoning ($50,000)
    – Eliminating a proposed liquor license inspector ($50,000)
    – Eliminating a proposed executive assistant for the City Manager ($50,000)
    – Reducing community grant funding to FY 2011 levels ($45,000)
    – Eliminating an intern and studio operator for the Public Information Office ($35,000)

    The City Council is expected meet next week to begin voting on budget amendments, including the provisions of the proposed agreement. Finance Director Bruce Miller is preparing a more detailed breakdown of the proposed budget cuts for that meeting. More details will be forthcoming.

  11. Bob McWilliams says:

    Phill:

    Those numbers only come up to $1,400m; where’s the other $1,400m? The tax increase number is pretty clear, but the $2.8 million in spending cuts appears to be far from fully documented.

    How much is the new plaque that say’s Ellen Moyer Back Creek Nature Park? You can start saving right there.

  12. Here’s a link to a two-page summary of the budget agreement that shows the cuts: http://bit.ly/jsCh5p. The Finance Committee is meeting at 5:30 p.m. today, and the cuts will likely be discussed there. (It will be televised live on City TV.) In addition, Finance Director Bruce Miller will provide a detailed presentation on the cuts at a City Council meeting that is expected to occur next week. Details are forthcoming.

  13. Bob McWilliams says:

    Phill:

    Thanks for the numbers. However, I remain skeptical, and as you know, we disagree about counting a hire that never existed as a cut is something only politicians do. In the real world a cut is when you actually reduce something, not the elimination of something you hoped for, but has never happen.

    Maybe if the Mayor announces the planned addition of 100 employees, then eliminates those vacant positions, you can increase your cuts from $2.8 million to $20 million. I’m beginning to think that Malinoff asked for an assistant, only so he could cut the position before it was filled and claim some sort of savings.

  14. sickofpaying says:

    I agree with Bob, eliminating what you wished for does not equal a cut. That’s ridiculous. I also don’t see a lot of detail in this presentation.

    Why we would continue to fund AAEDC to such a large extent (I understand the need for it to exist, of course) but yet chop essential services like police (which we desperately need given the crime rate in Annapolis) and fire is beyond me. Not going to be able to attract “new businesses” to Annapolis if the people who work in them are afraid of the crime. Just doesn’t make a lot of sense.
    We need a line item budget. That will tell the tale.

  15. Bill Kardash says:

    A couple of things need to be clarified:

    the number of City employees that leave due to “attrition” is only 120 WHEN you include summer employees and PTers. “Regular” attrition is more like 30-40 annually (this is from Ross Arnett who got the numbers from HR). Because a “hard hiring freeze” will require Council approval for any replacemenets, I suspect most police and fire requests to hire would gather the needed 5 Council votes.

    There is $265K to be “saved” by deferring the transfer to “permanent status” for 21 contract employees. To me, that is strictly a paper transaction for THIS FY and really doesn’t save anything … just defers it.

    I understand, too, that $300K from police and fire is, probably, a reduction of OT. Again, public safety issues are the most maleable and could be increased by the Council if some event causes the need for “more” OT.

    Lastly, the new position for Mike Mallinoff’s Asst will, I understand, be filled by transferring an existing employee to fill this need. It does make you wonder why the Dept. they are leaving had this “extra”” staffer in the first place.

  16. Bob McWilliams says:

    Phill:

    Interesting comments by Kardash. I hope we’re getting public information from the city and not political propaganda. For some reason, I get the feeling it’s more of the latter.

    So, your counting as savings, the elimination of a job that never existed (Malinoff’s assistant), while at the same time still filling that job.

    I can’t wait to write a column with that bit of thinking as the theme. It’s that kind of flim flam, along with the apparent misrepresentation about attrition that has earned many of our local politicians so little respect.

    Confidence in our City goverment is already almost non-existent. Needing to constantly wade through the spin and what looks like outright misdirection is really becoming quite annoying.

  17. whens it stop says:

    I see utilities is using the old state police barracks, wheres the money coming from for that. They just built the new rec building couldn’t that be used more as a utility office.if they took all vehicles away from people taking them home all departments(city, state, county local government ) we would knock a hole in dept. By raising taxes all that is going to do is have more people move to Delaware or southern states. I’m one of several I’ve talked to considering it. When your on a fixed retirement how are you supposed to make ends meet.

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