Elderly homeowners in Baltimore could get a big property tax cut if the City Council approves pending legislation calling for a relief plan similar to one recently started in Howard County.
But fears of revenue loss to the city could scuttle the measure. Similar concerns about financial implications arose in Howard County before the bill's passage Oct. 30, but politicians cast aside those doubts in the week before the Nov. 7 election.
Some worry that the city's 2007 elections might be prodding the council into rushing ahead with the bill without the proper review that also appeared to be missing in Howard County.
The Baltimore bill, introduced by Councilman James B. Kraft, proposes to give a 25 percent property tax cut to residents age 70 or older who live in homes they own and who have annual incomes under $35,000. It also calls for freezing their annual bill until their homes are sold. Seniors would have to reapply each year.
The measure nearly mirrors Howard County's legislation, where income cutoff was set at $75,000.
Howard officials estimated that it could cost the county up to $4 million a year in lost revenue. But before the County Council voted to pass the measure, officials had still not determined how many people qualified or how many seniors sell their homes and move because of taxes.
Baltimore Councilman Keiffer J. Mitchell Jr., who chairs the taxation and finance committee that is scheduled to review the city proposal Jan. 25, said he does not want to see the council move forward without such data.
"I don't want to see us giving away the store for the sake of an election year," said Mitchell, who might be running for mayor or council president this year. "You want to look at it more responsibly."
Kraft said the financial implications would be minimal since the number of people affected is likely to be very small.
"I don't think [the finance department] has seen a tax credit bill that they like," Kraft said. "The trade-off is worth it.
Kraft said many of his Southeast Baltimore constituents are elderly residents who have owned their homes for generations and do not even have mortgages. But their tax bills continue to escalate even as their incomes decline.
Although city law prevents property tax increases from exceeding 4 percent in any one year, Kraft said any amount of savings would be helpful to residents on limited incomes.
"For those in the most dire need, this would allow us to help them out a little bit," he said.
Mitchell said he wanted to make sure the tax benefit was dispersed fairly. He does not want to see rich elderly residents with eligible income getting the same break as poorer homeowners.
"The person in Roland Park or Guilford living off a trust fund getting a tax credit - we want to look at that," he said.
Joseph DeMattos Jr., Maryland state director of AARP, said his review of statistics shows that the benefit would be equitably administered.
"It will impact about 20,000 Baltimoreans in pockets around the city," DeMattos said. "It will be fairly evenly distributed."
Councilwoman Helen L. Holton, a taxation committee member who is considered a candidate for city comptroller, said the city needs to figure out an effective way to accurately determine if the credit would get to those most in need.
"In concept I think it's a really good idea," Holton said. "We have to make sure that we're doing it in a way that doesn't cost us more than the tax credit. We don't have many opportunities for new revenue. Each time we take revenue off the table we have to look at what services we're going to curtail in order to do that."
Raymond S. Wacks, Baltimore's budget director, said his agency's review of the legislation would be done sometime this month. But he said he is certain the credit will be an added expenditure.
"It will cost us money," Wacks said. "What am I going to give up in order to do that?"
Wacks said the bill calls for applying the tax credit after other state credits are used, which would further deplete city revenues.
"The real question is how these work together," he said. "I don't have answers on all of these things yet."
DeMattos agreed with Kraft that the benefit is worth the "modest" costs associated with the credit and that the costs would be far less than in Howard County.
"At first glance this seems to be a minimal to modest loss of income that will have a major impact on the lives of people," he said. "It's a modest and targeted effort to provide relief for those folks in Baltimore who are house-rich and potentially cash-poor."
He said surveys of AARP's 800,000 Maryland members shows that large majorities would prefer to grow old in their homes, and that other studies show that doing so improves the health of senior citizens. That could result in other savings: Health care costs are driven down if seniors can remain in their homes, he said.
"With the revitalization of urban America, people living longer and wanting to age in their communities - these kinds of [tax credits] are going to pop up across the United States," DeMattos said.