Prince George’s OKs $2.64 billion budget

But phone tax issue remains unresolved

‘‘I think there was short warning on it,” said County Councilman Tony Knotts (D-Dist. 8) of Temple Hills. ‘‘We’re trying to get some clear answers on it.”

The proposal would raise the tax on phone bills from 8 percent to 11 percent. Tax increases require separate legislation and cannot be approved through the budget process alone. County Executive Jack B. Johnson (D) said he proposed the $17 million tax hike for the school system, which was funded at $1.65 billion, short of the $1.7 billion originally requested.

Johnson’s budget made it through relatively intact, although he had to reduce his school board request by $28 million after Geographic Cost of Education Index funding that he expected from the state did not come through.

But council members said the reduction won’t significantly affect the school system, which could make up the shortfall with surplus money left over for this year’s budget, which ends June 30.

The overall budget is 11 percent more than last year’s spending plan.

‘‘This budget represents the values and priorities of Prince George’s County,” said Council Chairwoman Camille Exum (D-Dist. 7) of Seat Pleasant. ‘‘Education and public safety are at the core of government obligation.”

The biggest change to Johnson’s budget came as a $7 million boost to Prince George’s Community College to help defray the cost of tuition for thousands of Prince George’s high school graduates who attend PGCC.

‘‘Many of them cannot really afford to go to the University of Maryland,” said Councilman Samuel Dean (D-Dist. 6) of Mitchellville.

The budget also includes $12 million for the struggling Prince George’s hospital system, as part of the county’s pledge to fund the hospital through June 2008. And it includes $244 million for the police department, a 16 percent increase over last year.

In a May 22 letter, Johnson urged the council to approve the proposed telecommunications tax increase. A decline in the local housing market has had the county looking for new revenue sources since Johnson and the council cut the income tax rate last year.

But the phone tax increase has generated opposition from residents who say the county can’t impose it without voter approval. Opponents say the county is trying to circumvent a 1996 measure that requires any new taxes or fees to be approved by referendum.

‘‘I just think it should be shot down completely,” said activist Judy Robinson, who helped push the referendum measure in 1996.

‘‘The law is very clear. There are no gray areas here,” she said.

‘‘The issues are the excessiveness of the tax, and that the voters are being denied their say,” said Tara Potter, assistant vice president for Verizon, a telephone service provider.

She said the tax would hurt low-income families and unfairly treats a phone like a luxury.

The Prince George’s County Black Chamber of Commerce also opposes the tax.

Councilman Thomas Dernoga (D-Dist. 1) of Laurel said the increase should go to a referendum. ‘‘The voters spoke in 1996 that tax increases need to come to voters for approval,” he said.

But most council members are reserving judgment until county attorneys say whether they can unilaterally approve such an increase.

The Johnson administration argues that the tax does not need to come to referendum because the telecommunications tax comes from the state.

Exum said if the council approves the fiscal 2008 budget but shoots down the tax increase, there will have to be budget cuts or revenue will have to be found from another source.