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Baltimore to reconsider whether to cut taxes next year

Baltimore officials are revisiting the possibility of offering city homeowners a property tax cut in next year's $2.5 billion budget, they said Wednesday.

Officials ruled out a cut last month, but budget director Andrew W. Kleine said the idea is now back in play.

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"This is one of the items that is still under discussion, among many others, as we finalize the budget," Kleine told City Hall staff members as they reviewed the spending plan Wednesday.

Mayor Stephanie Rawlings-Blake has cut property taxes for homeowners by nearly 14 cents -- about 6 percent -- since she took office in 2010. The mayor has pledged to cut property taxes by 20 cents by 2020, and by 50 cents by 2022.

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Rawlings-Blake declined to propose a cut in her preliminary budget last month. She said the cuts of the past five years had put her ahead of schedule, and Kleine said the Horseshoe Casino had delivered less revenue than expected.

A spokesman for the mayor stressed Wednesday that the preliminary budget released in March was subject to change.

"Property tax cuts have always been a priority for the mayor," spokesman Kevin Harris said. He said officials have not identified specific funds to allocate to a tax cut — which, depending on its size, could deprive the treasury of several million dollars.

Baltimore's property tax rate is double that of surrounding jurisdictions. In 2010, the city's tax rate was $2.268 per $100 of assessed value. The rate for owner-occupied properties now stands at $2.131.

City officials said their ability to reduce the tax rate would hinge in part on how much money in state aid the schools receive.

Gov. Larry Hogan is considering whether to allocate $11.6 million in state aid to Baltimore's schools. The General Assembly, in a dispute with the governor over tax cuts and pension funding, among other issues, set aside about $68 million in funding for schools statewide. But Hogan said he has not decided how he will use the money.

Kleine called the school funding issue "very serious."

"I know the schools are looking to us for some assistance there," he said. "There will be some difficult choices to make."

Last year, the city's tax base grew by $1.3 billion — by far the fastest rate in the state. But those gains have come with a cost: Baltimore lost $14 million in state aid to city schools under a funding formula.

With Baltimore's economy improving, the city expects to bring in $72 million more in property tax revenue in fiscal year 2016. But city officials have allocated only about $5.3 million more in aid to the school system.

Rawlings-Blake said she is "still concerned about the schools budget."

She said the spending plan introduced by Baltimore schools CEO Gregory Thornton is dependent on millions of dollars "caught up in no man's land with the governor's budget."

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"I hope that the governor uses the discretion that he has to appropriate that money in the interim," Rawlings-Blake said. "He does have that authority, and I hope he uses it."

City Council President Bernard C. "Jack" Young said he wants to see the schools cut bloat. He wants the district to conduct an audit of school system-provided health insurance.

In 2013, Baltimore officials conducted such an audit for city workers amid questions about the eligibility of some dependents.

The result: The city dropped more than 1,600 spouses, children and others from city health care coverage after workers failed to fill out forms to prove they were eligible dependents. The move will save Baltimore about $6.5 million a year, officials said.

City officials said they have been in discussions with school officials about conducting a similar audit.

"We were told by the schools they will do a dependent audit this year," Kleine said. "The CEO, Dr. Thornton, is aware that health benefit costs are something he has to tackle."

Thornton says he wants to negotiate with unions to curb health care costs. He says the district could save $2 million to $3 million just by cutting off separated spouses and overage children from benefits.

Baltimore Sun reporter Yvonne Wenger contributed to this article.

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