1:00 PM EDT, June 18, 2013
In passing Mayor Stephanie Rawlings-Blake's budget Monday night, City Council members said they hoped the whole thing would be more or less a wash for Baltimore residents. Property taxes are going down, but new fees are coming to pay for stormwater pollution mitigation, and new taxes will hit billboard advertising and taxi rides. No doubt some residents will pay more, and some will pay less, and in a city where poverty and joblessness are persistent problems, such changes are inevitably fraught. Likewise, the mayor's proposal to increase salaries for civilian city employees while also forcing them to contribute to their pension for the first time appears not to be a sure thing in the council amid worries that it asks too much of workers who occupy some of the lower rungs of the municipal pay scale.
Those concerns are valid, but they miss the big picture. In terms of Baltimore's overall trajectory, these changes are far better than a wash. They are the first steps down a path that can make the city more attractive in comparison to surrounding jurisdictions as a place to live and work. A competitive Baltimore holds the promise of a virtuous cycle of investment and growth that over the long run would benefit existing city residents as much or more than the new arrivals.
The reasons people have chosen the suburbs over the city in recent decades are complex, but three factors with outsized influence are certainly crime, schools and taxes. Crime rates go up and down from year to year, but the overall trend since the 1990s has been a significant reduction in lawlessness and an improvement in public safety. Baltimore's schools are without question stronger than they were 10 years ago — test scores and graduation rates are up, dropouts and truancy are down — and they are about to get stronger with an infusion of more than $1 billion to build new schools and renovate old ones. There are now plenty of safe Baltimore neighborhoods with good schools from which families can choose.
But the choice is still a costly one because the city's property tax rate remains twice that of any other jurisdiction in the state. City leaders have talked about that problem for years, but Mayor Rawlings-Blake's budget is the most significant step toward doing something about it.
On the average, the advent of the stormwater fee and the reduction in property taxes — 2 cents per $100 in assessed value for all properties, plus another 7.3 cents per $100 for owner-occupied homes — more than evens out for city homeowners. It's an even better deal when you consider it this way: The stormwater fee is a state-mandated response to Environmental Protection Agency regulations calling for new efforts to mitigate the pollution carried by rainwater to the Chesapeake Bay and its tributaries. Baltimore and nine of the state's largest counties were required to enact such a fee by July 1, and while the exact rates and fee structure vary from one jurisdiction to the next, the city is the only one that is lowering its residential property taxes at the same time. The amounts raised by the taxi and billboard taxes are minuscule — in the neighborhood of $1 million a year each — and they fall heavily on tourists and out-of-state corporations. On the whole, the effect is to make Baltimore a slightly more attractive place to live, not less.
At Monday's meeting, Councilwoman Helen Holton decried the mayor's proposed reforms to civilian employee pensions and sought to increase pension benefits at the same time. The council narrowly rejected that idea and should do so again if it is resurrected when the pension reform bill comes up for a final vote. It's true that many of the affected workers earn relatively low salaries, but this legislation doesn't make that problem worse, it improves it. Over five years (and because of the compounding nature of the pay raise), these workers' salaries will be about 10.4 percent higher. The pension contributions come from pre-tax dollars, so actual take-home pay in the end will be substantially higher than the 5 percent bump the Rawlings-Blake administration has been advertising.
What's crucial now is for the city to keep up its momentum. The mayor has more pension reforms on tap, including a shift for new hires into a 401(k)-style plan for civilian employees or a hybrid defined contribution/defined benefit plan for firefighters and police. Together, those changes are projected to save the city $125 million over 10 years. The mayor will need to find a way to gradually reduce the size of the city workforce. And yet to come is her proposal to establish trash collection fees and to use the money to reduce the property tax rate. The details of such a plan will require close scrutiny, but in general, the idea of diversifying the city's revenues so it relies less on property taxes is sound because of the unique role that levy plays in discouraging population growth and reinvestment in Baltimore.
Ms. Holton called the budget "a tale of two cities," one in which the poor get crushed by taxes and fees and the rich get richer. But the point of the mayor's approach is to make Baltimore a tale of three cities — that is, one with a vibrant and growing middle class that creates opportunities for those at the lower rung of the economic ladder to pull themselves out of poverty. It will take time and commitment, but it can work.
Copyright © 2014, The Baltimore Sun