Inside City Hall
Inside City Hall: The joys of unexpected surplus revenues
The billboard excise tax brings a new source of un-budgeted cash to city coffers.
Above: Queen Latifah smiles at passing drivers on Falls Road. Revenues from the new tax on billboards have quickly piled up.
Last year it was speed cameras. Payments demanded of motorists by those irksome machines flooded the Rawlings-Blake administration with $4 million in surplus funds.
These days speed camera revenue has dried up – the program was suspended in April because of unspecified “mistakes” resulting in faulty tickets – but City Hall has found a fresh source of cash.
Tomorrow, the Board of Estimates will approve $250,000 in un-budgeted money coming into city coffers from the new billboard excise tax.
Last June, the billboard tax was ramrodded through the City Council as part of the mayor’s “Change to Grow” 10-year financial plan replete with warnings that failure to pass the tax could doom the city – or at least its arts and cultural programs – to fiscal ruin.
Now just two months after the tax went into effect on July 20, it has generated $1.25 million, or 25% above what the city said would constitute its full revenues for the year.
So what gives? Andrew Kleine, the city’s budget director, is a sophisticated technocrat who knows his numbers. Thus the administration’s assertion, in a note submitted to the Board of Estimates, that the surplus revenue “could not have been anticipated” by the city’s budget hawk seems dubious.
After all, when Councilman Bill Henry called for the same billboard tax in 2012, he said it would generate $1.5 million a year.
Where did he get his projections? From the budget director’s office. (Kleine did not respond to The Brew’s request for comment.)
A Surplus and Then Some
The same thing happened last year with speed cameras. City Council President Bernard C. “Jack” Young predicted that revenues would be $3.5 million above the $15 million in ticket citations that the administration was telling the Council and the public would be the total take.
Young wanted to use the surplus to keep recreation centers and fire companies from closing, but Mayor Stephanie Rawlings-Blake denounced his plan as irresponsible, according to The Sun’s Luke Broadwater. She warned of “painful midyear budget cuts” if Young’s plan were approved and the increased speed camera revenue didn’t come through.
Turned out that Young erred only on the side of caution.
The surplus revenues turned out to be $4 million, not $3.5 million, and rather than saving rec centers or fire companies, the funds were shoveled into the maw of the city transportation department where nobody really knows where the expenditures go because the agency hasn’t been audited in decades.
During the budget deliberations this year, Kleine told the City Council that if the new tax on billboards was not approved, it could mean cutbacks to such cultural icons as the Walters Art Museum, Baltimore Symphony Orchestra and Baltimore Museum of Art.
But instead of cutbacks, the mayoral-run Office of Promotion and the Arts is scheduled to receive $250,000 in supplemental billboard tax revenues to establish a “Creative Baltimore Fund.”
The artists and non-profits expected to be bankrolled by this fund probably won’t thank a giant billboard company for paying for their creativity.
Clear Channel Outdoor, which dominates the billboard business, has been socked with a tax that more than doubles the $600,000 it had been paying the city in annual property taxes.
The excise tax calls for a $5-square-foot tax on standard billboards. Typically sized at 9-by-20 feet or 12-by-24 feet, the tax adds $900 or $1,440 to the cost of advertising.
Higher taxes are on the way. The legislation passed last June calls for a $15-square-foot tax on electronic billboards. That will triple the current tax if and when Clear Channel follows the industry trend and electrifies its billboards.
All of which translates into a stream of ever-rising revenues for city government. And you can count on this projection.