Mayor Catherine Pugh gives State of the City address. (Kenneth K. Lam, Baltimore Sun video)
Mayor Catherine Pugh proposed a property tax cut Monday for Baltimore homeowners that would roll the rate back to the lowest it has been in a half-century.
By 2021, Pugh wants to drop the effective rate for owner-occupied homes to a hair under 2 percent — or $1.998 per $100 of assessed property value.
“Cutting property taxes in Baltimore in order to be more competitive is necessary,” the mayor said from City Hall during her third State of the City address.
Pugh said she wants the effective tax rate for owner-occupied homes to be reduced to $2.048 beginning in July, fulfilling a promise under the previous mayoral administration to knock 20 cents off the rate by 2020.
The cuts would need approval of City Council and the Board of Estimates to be enacted.
The average owner-occupied home now pays $2.07 per $100 of assessed value.
The back-to-back cuts should reduce taxes for an average Baltimore homeowner on a $158,379 house by $114, from $3,278 to $3,164.
The Pugh administration said the cumulative cost for the 20-cent reduction will be about $36 million in fiscal 2020. The additional nickel Pugh is knocking off will cost about $9 million.
Stephen J.K. Walters, a Loyola University Maryland economist, said the property tax breaks are a small contribution to making the city more competitive.
But, he said, the city would have to slash the rate in half to have real impact. As it is now, the city’s overall property tax rate of $2.248 per $100 of assessed value is about twice that of surrounding counties.
“Tinkering at the edges with pennies and nickles on the dollar does not get to the fundamental fact that you can go a few miles outside the city and investment is taxed much more lightly,” Walters said.
Walters said the last time the city taxed homeowners at 2 percent was 1971. The rate rose steadily between 1950 and 1975, when city officials increased taxes 19 times.
Walters said that sent many homeowners fleeing for the suburbs.
The cut would be available to owner-occupied homes through a tax credit, which applies to the assessed value of improvements on the land, and varies by house. The rate of $1.998 per $100 by the 2021 fiscal year is a city-calculated average of the functional tax rate for people who live in the homes they own.
Councilman Kristerfer Burnett of West Baltimore said Pugh’s address outlined the progress the city’s seen since she took office, along with a new City Council, in December 2016. The tax cuts would add to that progress in a significant way, he said.
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“Residents feel the strain of living in the city, whether it’s violence or issues in our neighborhoods or schools, and to be able to have some relief as it relates to property taxes is a big deal,” Burnett said.
Pugh said reducing crime remains her top focus. Rather than unveil any new initiatives, the mayor used her 45-minute address to highlight efforts underway, such as her recruitment of Michael Harrison as police commissioner.
“One life lost in this city is one life too many,” Pugh said. “Driving crime down, making this city safe is, and continues to be, my No. 1 priority. It is the single most important factor in improving the quality of life for all of us.
“We can and will do better.”
The mayor also spotlighted her efforts to get young people summer jobs. She said 16,000 young people applied to work, up from 12,000 last year. About 9,000 were placed in jobs last summer.