FISCAL REFORM 185

to sell their homes because local government had turned to the prop-
erty tax to finance entirely its needs, just about entirely—90 percent.

Something had to be done about this. There had to be a better
balance in distribution of the tax burden between other citizens who
could meet the needs with money that was escalating as well as costs—
from income. Income is the truest index of ability to pay so we turn to
the idea, in this fiscal reform, of providing the subdivisions with suffi-
cient additional money from the income tax so that they would not
have to turn to the property tax for the rising costs of local govern-
ment to finance the needs of vital services.

Now I understand—let's put this on a very personal basis—Allegany
County has a current operating budget of a little over $8 million a
year and if the agency requests are granted, the new budget would be
somewhere just short of $10 million a year—about a $1. 6 million in-
crease of funds is needed according to the operating departments of
the County. Now I would suppose that possibly this can be reduced
by some sharp pencil work on the part of your very capable commis-
sioners. But for the sake of our example, let's assume that you do have
to come up with $1. 6 million in new monies. Without a tax reform
this would have to be financed almost entirely from the property tax.
Mr. Ebert has told me that a one penny levy on your property tax will
produce about $25, 000. This would mean to produce the $1. 6 million
increase you'd have to increase the tax on property 64 cents in one
year. This would certainly cause a great hardship to the elderly citi-
zens. Under the tax reform, the new State structuring will give you
$1 million of that $1. 6 million. This will mean that even if you grant-
ed every one of the agency requests, the maximum additional money
to be financed is only $600, 000 instead of $1. 6 million. You don't even
have to turn to the property tax for that because under the new tax
reform you have been given certain flexibility in the way of a local
income surtax, up to any point not to exceed 50 percent of the State
tax. So that you are in a position where it is entirely possible through
diligent budget cutting to hold your property tax even this year.

This is not a dream. It has happened in counties where the com-
bined total of property tax raises before tax reform last year exceeded
$1. 00. It's happened in counties like Baltimore County where the
property tax is going to be held even or reduced; and Montgomery
County where the property tax was cut 6 cents because of the new
tax reform; and Baltimore City where there will be no property tax