"We have to try and figure out how we slice and dice the data to get the biggest bang for the buck — what we should go after first," said William Voorhees, director of revenue and tax analysis for Baltimore's Finance Department. "And that's not an easy thing."
As home prices soared and anti-tax sentiment rose nationwide in the 1970s, the Maryland General Assembly passed a law to put a ceiling on taxable assessment increases for two years. As long as counties didn't increase their rates, that would cap the rise in homeowners' tax bills at 15 percent for each year.
Lawmakers said they were in crisis mode, looking for an emergency fix. A 1977 Sun story quoted then-Sen. Jerome F. Connell of Anne Arundel County saying, "We're really at the point with assessments that we're literally putting people out of their homes."
Francis B. Burch, Maryland's attorney general at the time, said a short-lived cap would probably avoid running afoul of the state constitution's requirement to tax homeowners uniformly, but "any statutory scheme to place a percentage limitation on assessment increases over a long duration would become unconstitutional," he warned in an opinion.
But legislators kept passing extensions to the credit, and the attorney general kept cautioning the General Assembly. When the program crossed the 11-year mark, the attorney general's office flatly concluded that it violated the state's constitution.
In 1990, facing an election and homeowners agitated after another run-up in home prices, state legislators made the program more generous, dropping the cap from 15 percent to 10 percent. They allowed local governments to set ceilings even lower, and Baltimore's has been 4 percent ever since.
University of Maryland law professor William Reynolds said he is "amazed" no one has challenged the homestead credit in court, if only for ideological reasons. He said the state constitution's requirement for uniform tax rates "seems to provide a strong case for new home buyers," because they see no immediate benefit from the credit.
But Reynolds declined to speculate on whether a legal challenge would succeed. "The question," he said, "is whether the Court of Appeals will upset a third-of-a-century tax break, which will severely inconvenience many people, in order to satisfy the apparent plain language of the law."
Eighteen other states and the District of Columbia have assessment caps, though their approaches vary, according to the Lincoln Institute. Oregon, for instance, has a 3 percent statewide cap that applies to both commercial and residential property, and it remains in place when a parcel is sold.
In Maryland, some legislators warned years ago that the homestead credit would create unintended consequences.
When the City Council lowered Baltimore's cap to 4 percent, then-Councilman Anthony J. Ambridge was the lone council member to vote against the reduction. At the time he argued that 4 percent was too low, a view he still holds two decades later.
Keeping such a tight lid on taxes for longtime homeowners has deprived the city of revenue it would need to finance a meaningful cut in the citywide property tax rate, he says. And that high overall rate, he argues, has hurt many local businesses, which don't qualify for property tax breaks unless they can afford to expand or make new investments.
"Long-term it's had an adverse effect for the city as a whole," Ambridge said of the 4 percent cap.
'I'm just stuck'
The credit also creates dilemmas for some of its beneficiaries.
Baltimore homeowner Tracy Gosson has a homestead credit that covers nearly $3,600 of the taxes on her home in Butchers Hill, almost two-thirds of the total. She'd like to sell and buy another city home, but she'd lose the break she spent 16 years accumulating. She paid $40,000; now it's assessed at $235,000.
"I'm just stuck in a place where I don't want to sell my house," said Gosson, who heads a consulting company and formerly ran Live Baltimore, a nonprofit organization that encourages city living.
But she likes the homestead program. Her solution is to expand it rather than scrap it — allow residents to take their credits with them if they buy a more expensive home in Baltimore.