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Rawlings-Blake says she’ll address budget shortfall, offers no specifics

Mayor Stephanie Rawlings-Blake said Wednesday she will use her annual State of the City address on Monday to announce steps aimed at averting a $745 million budget shortfall over the next 10 years.

Mayor Stephanie Rawlings-Blake

Mayor Stephanie Rawlings-Blake (Melody Simmons/The Daily Record)

At a morning press conference held to present an independent report that says Baltimore is on a path to bankruptcy unless its leaders correct structural deficits in the city’s budget, Rawlings-Blake said she would unveil budget cuts next week but declined to reveal specifics.

The report highlighted a need for the city to address its aging infrastructure and rising costs for retiree health care benefits. Together, those costs could total $2 billion over the next decade, it said.

“Taking on these challenges will be critical both for the health of the city’s finances and to help Baltimore compete for growth over the next 10 years and beyond,” Rawlings-Blake said.

“A status quo approach is not sustainable.”

City Budget Director Andrew Kleine said City Hall’s existing surplus, or “rainy day fund,” established in 1993, would be depleted of its $90 million balance within years unless the reforms are undertaken.

In 2010, Rawlings-Blake closed a $121 million budget gap by raising taxes on parking, entertainment and hotel rooms and implementing a controversial bottle tax. City employees have been forced to take furlough days over the past three years, and some recreation centers and firehouses have closed in response to budget woes.

In total, Rawlings-Blake said she has worked to erase nearly $300 million in budget shortfalls over the past three years.

Asked whether the city would try to reopen tax breaks totaling millions of dollars that have been extended to developers, such as tax increment financing packages that trade public investment for future tax gains, Rawlings-Blake said those deals are all scrutinized.

“Every tax increase that goes through is examined with an eye on ‘but for,’ ” Rawlings-Blake said, referring to a standard set by the Baltimore Development Corp. to determine whether a development would not go forward “but for” the city tax break.

“We’ve done it and we will continue to do it,” she said.

The BDC is expected to move a $100 million TIF request for the $700 million redevelopment of Harbor Point, to include a new Exelon Corp. tower, this spring.

In all, Rawlings-Blake said she planned to propose a “bold set of major reforms” to address the budget deficits over the next few weeks.

“The reforms will focus on eliminating the deficit, making modern investments and changing the city’s tax structure to make Baltimore more competitive for growth,” she said.

“City government faces a serious structural imbalance between slow-growing revenues and faster-growing expenses.”

City residents pay the highest property taxes in the state, but the mayor said raising those taxes was not an option.

City Councilwoman Mary Pat Clarke attended the press conference and called for a cautious approach by the city’s executives.

The city’s charter mandates a balanced budget be passed each year, and Rawlings-Blake is expected to unveil her 2014 budget next month.

“This is a plan going forward,” Clarke said. “This city is not in financial jeopardy. It is not in ruin or bankruptcy.”