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Audit the tax records

Accounting and AuditingFinanceLocal GovernmentCredit and DebtStephanie Rawlings-Blake

As a rule, nobody likes to be audited. Not private companies, not government agencies and certainly not ordinary taxpayers. It's inconvenient, it's time-consuming, and for many of us, it's a bit insulting, implying as it does that we have done something wrong.

Yet while it was comforting to hear this week that Mayor Stephanie Rawlings-Blake has taken significant steps to reduce costly mistakes on property tax bills, it was also disappointing to hear she opposes an audit by Comptroller Joan M. Pratt recently proposed by City Councilman Carl Stokes, who chairs the council's taxation committee.

Certainly, we can understand the mayor's hesitation. Ms. Pratt has been fighting her administration tooth and nail over the purchase of telephones — a senseless squabble that has cost the city millions in lost savings. And Mr. Stokes has been a high-profile (and, at times, overly aggressive) critic of the Harbor Point development and of the mayor's support for it. We are guessing that neither is particularly high on the mayor's guest list for home Ravens games.

Further, the mayor and others have argued that they'd welcome an audit, just not right now, as the city's finance office is busily engaged in reforms of its own, including an automated billing system that won't be fully operational until March. They have essentially been doing audits of their own and perceive the comptroller's efforts as not only redundant but potentially harmful. Why not hold off until next spring?

Those are valid points, but the sad reality is that Baltimore has seen too many costly financial errors in recent years for Ms. Rawlings-Blake to believe an independent audit would not help restore trust in city's financial dealings. We don't know that Ms. Pratt's auditors will discover anything that the finance department doesn't already know, but we strongly suspect the taxpayers of this city will sleep better if they're given a chance.

That's not to impugn anyone's integrity, but let's not lose sight of what's been uncovered so far. Faulty property tax billings that have cost the city millions over the past decade, miscalculations of historic and homestead tax credits and errors in the Enterprise Zone tax credit program. There have also been multi-million-dollar problems with water bills, but perhaps it's best to stick to property tax irregularities for now.

Again, this is not a cause to jump on Mayor Rawlings-Blake. Some of these errors are related to miscalculations made by a state agency, and most existed before she took office. Nevertheless, they are troubling, and that so many were first uncovered reporters for The Sun with no particular training in accounting or auditing should be noted, too.

The question is not whether the property tax program should be audited by the comptroller but why it has taken so long for that process to get started given city government's tight finances. What is the purpose of having a city auditor — as mandated under the city charter — if he is not deployed in just these circumstances?

City Councilman William Cole IV recently observed that Ms. Rawlings-Blake has done more to correct these financial problems than any of her predecessors. That's unequivocally true given that these problems date to 1999. But, as he also pointed out, the city should have more eyes on these books, not fewer.

The reforms the mayor has pursued may, indeed, prove sufficient. Certainly, they haven't happened overnight. Her "Billing Integrity Unit" was formed several years ago and has found 1,300 errors this year alone and enough over the last three years to put about $15 million in the city's coffers, according to the mayor's spokesman.

But if any of us were found to have made such financial errors in our personal tax returns, would the U.S. Internal Revenue Service leave it to us to check our own books or even wait until the next tax year to examine them? No, they'd insist on an immediate audit. Why should government not have similar checks and balances? That is one reason why we've endorsed regular audits of city agencies in the past.

As for Councilman Stokes' other proposal — privatizing tax calculations and collections — that's a subject worth investigating, particularly for collecting back-taxes. But in terms of calculating what's due, we would have our doubts about how much privatization could accomplish. The buck still stops with city government.

Better for the mayor to set aside the politics and treat the comptroller's audit as what it should be — an independent accounting of the books, not a political witch hunt. City residents have a reason to be concerned about how accurately tax bills are being calculated. To the extent an audit can allay those fears, it should be encouraged. Perhaps they'll find nothing more than what the Billing Integrity Unit has already uncovered, but even that finding would be worthwhile if it restores public trust in city government.

Copyright © 2014, The Baltimore Sun
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Accounting and AuditingFinanceLocal GovernmentCredit and DebtStephanie Rawlings-Blake
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