MARVIN MANDEL, Governor                       3103

cannot compare to the property tax either in stability or
in predictability. A labor dispute at a major plant, a
curtailment of economic activity because of recession,
natural disaster, or energy shortage, a slowdown
resulting from the effects of labor disputes elsewhere in
the country — all of these or any of them could have a
serious effect on the revenues derived from an income
tax. Debt service is not a flexible expense — it is
there and must be met each year during the life of the
bond — and there is no doubt that the substitution of an
inexact revenue base will adversely and vitally affect
the county's ability to finance much needed capital
projects.

Of equal, if not greater, concern to me are the
inequities in tax burdens which will result if House Bill
314 is signed and implemented. Although some proponents
of the bill have asserted that, if the property tax is
removed from rental dwellings, landlords will respond by
reducing rents, the bill does not provide for such
reductions, and I have serious reservations as to whether
the County could legally mandate them. In light of the
pressures which have been exerted on landlords by the
unparalleled inflation in recent years, which have been
communicated to me in the context of their objections to
rent control legislation, I also have doubts as to their
willingness to reduce existing rents voluntarily — at
least to the extent of the savings in property taxes.

Thus, it is more than likely that this bill will
increase substantially the tax burden on renters in the
county. In that context, I might point out that, as of
1970, approximately 30% of all housing units in Baltimore
County were renter occupied. I also note that, according
to a recent study by Peat, Marwick and Mitchell, even
under existing law, renters of the popular garden and
high—rise apartments now contribute more revenue to the
county than they require in county expenditures, whereas
home—owning households require an average of $350 more in
expenditures than they contribute in revenue. To
increase the existing inequities in tax burden between
renters and home—owners is both unfair and unwarranted.

Even among homeowners, the bill would produce
inequities. Families in which more than one person works
would most likely have to pay more net taxes than they do
now, whereas persons of wealth, who derive their income
from tax sheltered sources would pay less taxes. Whether
a home owner would lose or gain under this bill would
depend on his aggregate net taxable income and the
assessed value of his home; but it is clear that many
homeowners would end up paying more taxes under House
Bill 314 than they do now.

In vetoing House Bill 314, I call attention to the