Mayor rules out property tax cut, will submit budget Wednesday

Baltimore mayor Stephanie Rawlings-Blake rules out property tax cut, city turns focus to riot recovery costs.

Mayor Stephanie Rawlings-Blake has formally ruled out a property tax cut for the coming year after flirting with the idea of giving one.

Her final $2.55 billion budget trims spending by charging smokers more for health insurance, ending coverage of Viagra for retirees, and capping the amount of leave city workers can cash out at retirement, administration officials said Tuesday. The spending plan for the year that begins July 1 will be presented to the Board of Estimates on Wednesday.

Administration officials said the budget was finalized before recent unrest in the city. They were under a time crunch to get the budget to the spending board and City Council, they said, and will now turn their attention to dealing with the financial cost of the Freddie Gray protests.

"Now, we're certainly focusing on the cost of the response and recovery and what's next," city budget director Andrew W. Kleine said.

Neither state nor city officials have tallied how much the demonstrations sparked by Gray's death in police custody will cost, officials said.

The mayor's spending plan gives many city workers a 2 percent pay raise, as called for in union contracts. It includes no major cuts to city services and dedicates 14 percent of city spending to schools.

The budget will eventually save taxpayers $700,000 a year by denying coverage of erectile dysfunction drugs for retirees, and save more cash by requiring tobacco users covered by city health plans to pay 50 percent more for their insurance.

But it also does not grant one of the continuing property tax reductions that Rawlings-Blake has pledged as she strives to make the city's property tax rate, the state's highest, more competitive.

She promised to cut property taxes 20 cents by 2020, and so far has trimmed 14 cents. Her preliminary budget introduced in March did not include a reduction, but a month later city officials said they were revisiting the possibility. While the nominal cuts have a small effect on the bottom line, economists say they help make the city a more attractive place to live.

In a statement, the mayor did explain why she ultimately ruled out a cut for the coming year, but said she was "ahead of schedule" on her plan.

"Those who remember the budget crises of just a few years ago know that Baltimore was not always as fortunate to be in the position we find ourselves today," she said. "We are investing in key priorities like public safety, education, and blight elimination without burdening residents with more taxes. My goal is to continue pressing forward with my 20 cents by 2020 plan until all of the tax relief promised to city residents is realized."

Property values in the city rose by 9 percent over the past year, Kleine said, meaning the city will have $72 million more to spend.

Overall, the city budget is expected to grow by about 4.6 percent.

The budget requires Board of Estimates approval before being sent to the City Council for its approval.

Comptroller Joan M. Pratt, who holds one of two seats on the five-member board not controlled by the mayor, said the city needs to follow through on reducing the property tax rate when possible.

"If there was a commitment to decrease property tax rate, I think that should be done," she said.

City Council President Bernard C. "Jack" Young said that in the light of unrest sparked by Gray's death in police custody, he thinks the city needs to look for ways to invest in jobs programs and other initiatives. In that context, he said, he thinks holding the line on property taxes would be palatable to most residents.

"I don't think in light of what's going on that the city's residents would care about two cents," he said.

Economist Anirban Basu of the Sage Policy Group agreed that "the timing is a little awkward. It feels like there's such bigger issues than a little bit of a tax reduction for homeowners in Baltimore City."

But, he said, "one of the things that the past couple weeks reminded us was that the middle class in Baltimore is not particularly large. One of the things that was highlighted last week was that the gulf between the have and have-nots in Baltimore is massive."

Basu argued that a slow-but-steady approach to trimming the property tax rate would help entice businesses to reinvest in the city and to make middle-class families more willing to move in.

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