When Mayor Stephanie Rawlings-Blake prepared her first city budget in 2010, she had to find a way to resolve a projected $190 deficit. In 2011, she faced another shortfall, this time $65 million. In 2012, the projected deficit was $48 million. Last year, it was $30 million. But now, for the first time since she took office, Mayor Rawlings-Blake is proposing a spending plan that includes no cuts to city services. Instead, it offers city workers a 2 percent raise — a far cry from the furloughs they experienced not long ago — and includes modest investments in a handful of priorities while continuing a long-term plan to cut property tax rates for homeowners. Considering the state's lackluster recovery from the recession and the economic headwinds caused by federal budget cuts, that's worth noting.
It's also worth noting that it didn't happen by accident. The mayor has gotten criticism during the last few years for what many considered her overly dire warnings about the need to make fundamental changes to the city's budget in order to preserve Baltimore's long-term fiscal health. She was derided as a doomsayer and a fearmonger for publicizing a 10-year projected deficit of $750 million and using it as a spur to enact pension and health care reforms, spending cuts and assorted tax and fee increases. None of that was easy, and it didn't win her many friends. (On the contrary, it prompted litigation from some employee unions.)
But the pension changes alone are saving the city about $80 million a year. Baltimore's health care costs have actually declined since 2010 — a stunning turn-around after years of runaway growth — and are projected to be about $106 million lower in 2015 than they would have been without the reforms. A change in firefighters' shift schedules (which also drew union opposition) will save about $7 million a year. Ms. Rawlings-Blake is also benefiting from a hard decision made by her predecessor, Sheila Dixon. Ms. Dixon cut the deal that led to the construction of the Horseshoe Casino in Baltimore, which is projected to provide the city with $13.2 million in new revenue. All told, those sorts of changes help explain how the city is able to afford to continue reducing homeowners' property taxes as part of a much-needed effort to make Baltimore's rates at least somewhat more competitive with the suburbs.
On that score, there is still a long way to go. If the City Council approves the mayor's proposal as introduced, homeowners in the city will pay a rate of $2.13 per $100 in assessed value, still $1.02 more than the rate in Baltimore County. Considering the differential in home sale prices between the city and county is not so great as it once was, that remains a formidable disincentive to city living. Still, it's worth noting that Ms. Rawlings-Blake has already cut property taxes for homeowners more than any of her predecessors, and if she keeps up this pace, she will be able to achieve a goal of reducing the rate by 20 percent within a decade. That would, at least, allow the city to lose the ignominious distinction of having the highest rates in the state, an honor that would pass to some municipalities in Prince George's County.
Baltimore still faces some big challenges, both economic and political, to achieve the vision Mayor Rawlings-Blake outlined in her 10-year plan. She set out to reduce the size of the city workforce by 10 percent, and this budget makes little progress on that front, cutting a piddling 23 vacant positions — and even that was cause for concern by the City Council president. The city is also making no discernible progress on modernizing its antiquated phone system, which is costing millions annually. And while the city's property values and employment picture are improved since the depths of the recession, they have not fully recovered, and their progress is uneven.
Still, the overall picture is a good one. Baltimore has lower property tax rates, fewer unfunded liabilities and a bigger rainy day fund than it did before the recession, and meanwhile, the city is contributing $38 million next year toward a plan that will pump $1.1 billion into school construction and renovation during the next few years. Not a lot of cities can match that record.
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