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News Maryland Sun Investigates

Checking the city's $15.9 million figure on 'recouped' taxes

The number: $15.9 million

What it is: The amount of money Mayor Stephanie Rawlings-Blake says the city's Billing Integrity Unit has "recouped" since 2011 by catching erroneous tax breaks and other tax billing problems.

How it breaks down: The mayor's office says the unit has sleuthed out errors with four types of tax breaks, whether because the break was too high or the property didn't qualify. Fixing those errors, officials say, has generated major additional tax revenue for the city.

•Homestead property tax credits to cushion rising bills for owner-occupants: $8.5 million recovered

•Brownfields credits for sites with past environmental contamination: $3.5 million

•Properties with tax-exempt status: $3 million

•Historic tax credits for renovating old buildings: $906,000

The back story: Rawlings-Blake cited the $15.9 million figure last week after her administration came under fire for persistent errors on city property tax bills. The Baltimore Sun recently documented more than $700,000 in mistakes on Enterprise Zone tax credits. While the city has moved to collect errors discovered in a given tax year, officials say the city can't legally bill for mistakes from past years. The exception is the homestead credit, because officials say the errors ultimately rest with the owners.

Rawlings-Blake asserted that the recovered money exceeds the $11 million that the city has lost out on over the past 10 years due to various tax errors that it lacks the legal power to fix. She hailed the city's net gain as she argued against calls for an audit of the Finance Department Department while her administration's billing oversight changes are fully implemented.

Though billed as "recouped" money, a big chunk of the $15.9 million actually reflects what the administration calls "forward savings" — that is, money collected in the years after an invalid tax break was fixed, said Rawlings-Blake spokesman Kevin Harris.

For example, the $3.5 million in brownfields savings is money the city has taken in over three years after deeming properties didn't qualify. The story is similar with the $906,000 in additional historic tax credit revenue.

The largest component — $8.5 million in homestead credit revenue — reflects a mix of back taxes the city has collected and forward savings due to the avoidance of lost taxes down the road.

City Councilman James B. Kraft questions City Hall's accounting, saying its methodology has inflated the savings in a way that misleads the public. "You count it once," he said of a corrected tax error. "This is what we saved this year. Next year it's not really a savings. It's a problem solved."

Copyright © 2014, The Baltimore Sun
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