Baltimore County Lost 8,000 Taxpayers

Smaller than expected income tax collections this year are being attributed to a loss of 8,000 taxpayers.

Keith Dorsey, director of the county Office of Budget and Finance, told the County Council during a Thursday budget hearing that a $54 million revenue shortfall is attributable to residents who relocated or stopped paying taxes.

"The county lost 8,000 taxpayers off the top end and off the bottom end," Dorsey said.

Dorsey said residents in higher tax brackets "may have moved away because of the tax rates." Residents in lower tax brackets "may have gone underground in terms of no longer paying taxes because of unemployment—at some point their unemployment ran out.

"They may still be out there but they're not paying taxes," Dorsey said.

Dorsey later said that the loss of taxpayers in higher brackets was based on speculation.

"Some have speculated that they have relocated because of the situation here in Maryland," Dorsey said, adding that he believed the economy also played a role.

"There were other things out there that caused people to stop paying taxes," Dorsey said.

The decrease, based on tracking filed tax returns, showed that Baltimore County lost more taxpayers in lower brackets than Baltimore City and Prince George's County. The county also lost more in higher brackets than Howard and Montgomery Counties.

"Our impact was much more than in any other county," Dorsey said.

Revenue estimates for the current budget year were made before the state comptroller had released statistical information on taxpayers—some of which hadn't been available for one or two years, Dorsey said.

"I didn't understand, I did not see we had the kind of drop of in terms of taxpayers," Dorsey said. "If you want to say it was an error on my part, you could say that but I did not have the information in terms of the net loss of taxpayers on Baltimore County."

This is the second straight year the county has experienced shortfalls in income taxes. Last year, county revenues were $132 million less than projected. County officials blamed the shortfall on a miscalculation by the comptroller's office.

Dorsey said his revenue estimates for the fiscal year 2012 budget will be more on target.

"I think I've made the necessary adjustments," Dorsey said. "My estimates are very conservative. I now see what was going on in Baltimore County and I've made the appropriate adjustments so I do not anticipate this will happen again."

The county's retirement fund is getting weaker according to an analysis by the county auditor's office.

Figures released Thursday show that the funds net assets in 2010 were equal to about 80 percent of the county's total retirement liability. That percentage has decreased nearly every year since 2000 when the retirement system reached a peak of nearly 112 percent funding.

The auditor cited a number of factors for the decline including the economy and the decline in the ratio of active employees to retired employees. Currently there are 9,633 active members of the county retirement system compared to 6,704 retirees — a ratio of about 1.4 to 1.

That ratio has declined every year since reaching a peak ratio of more than 2 to 1 in 1993.

The auditor's review noted that the system is "growing financially weaker" despite increased contributions to the system by the county over recent years.

Cost of living raises are not in the cards this year for county government retirees. County employees who have been retired five years are eligible for an increase of up to 3 percent based on federal consumer price index estimates if there is sufficient money available in a county fund that pays for such increases.

The consumer price index at the end of 2010 increased by about 1.5 percent. That would have resulted in a raise this year for eligible county employees of nearly $21 million. The fund that pays for such increases, however, only has a balance of $10.5 million—an amount insufficient to pay for even a 1 percent increase.

A 1 percent cost of living raise would cost nearly $14 million, according to a review by the county auditor.

Shopping cart fees on the horizon? Hear me discuss the issue with Bill Vanko, anchor of  Maryland Morning News anchor on WBAL 1090 AM, during our weekly chat about county politics.

North Baltimore Patch reporter Adam Bednar writes that the owner of a Baltimore bar is not impressed with Baltimore County's top prosecutor. State's Attorney Scott Shellenberger wrote a letter to city liquor board officials saying the bar is the source of some underage and binge drinking problems involving Towson University students.

Happy birthday to Gordon Harden, a former planning board member who ran for County Council as a Democrat in 2010. He turns 61 on Saturday.

And happy birthday to my editorial overlord. Doug Donovan, regional editor for Patch in Baltimore County and a former reporter for The Baltimore Sun, is 40 on Sunday. (Happy birthday, boss.)

Keep up with what's happening in Baltimore County politics by following Bryan P. Sears on Twitter and Facebook.