Political debate looms over the city's property tax rate

Back in the early 1990s, Baltimore leaders set a long-term goal: to have the city's property tax rate be no more than 150 percent that of Baltimore County.

I was reminded of that goal last week, when Mayor Sheila Dixon announced a task force to recommend property tax relief, as many residents are reeling from soaring assessments.


The city, of course, has never come close to reaching its goal.

Although the numbers and calculations have changed (rates are now based on 100 percent of assessed value, as opposed to 40 percent 15 years ago), Baltimore's property tax rate remains now what is was then: about twice that of Baltimore County's.


To reach that 150 percent goal, the city would have to shave its current tax rate of $2.288 per $100 of assessed value by about 30 percent, or about 60 cents.

Since the city derives about $2.5 million for each penny in the property tax rate, that would be a loss to city coffers of $150 million. That's about 8 percent of the city's overall operating budget.

Whether Dixon's task force will decide the 150 percent goal is still a worthy one to pursue -- and will recommend a blueprint and a timetable for achieving it -- remains to be seen.

But one thing seems certain: Dixon's charge to have the task force issue its findings after the pivotal September Democratic mayoral primary is unlikely to put off the political debate over property taxes. Indeed, the mayor's reluctance to commit this year to the third of a series of five previously announced 2-cent reductions in the property tax rate drew immediate rejoinders from Council President Stephanie C. Rawlings-Blake, a mayoral ally, and Councilman Keiffer J. Mitchell Jr., who is opposing Dixon for mayor. It's not a stretch to believe that the property tax rate could join crime and school governance as key issues in this year's city elections.

Which is not to say that the task force doesn't have a lot on its plate. Among other things, Dixon wants the panel to review the various tax credits and exemptions in place and recommend changes to the current tax and fee structure.

Some options that are apt to be politically popular with city residents, such as the initiation of a commuter tax, are just as sure to be political non-starters with the General Assembly.

Unless you're the federal government and can print money, the conundrum in cutting property taxes -- or any other taxes, for that matter -- is what needs do you leave underfunded?

The city has about 3,000 sworn police officers; Baltimore County has about 1,800. Yet I know no one who would seriously suggest the city cut 300 policemen to get to 150 percent of the county's strength.


And, yes, the city's property tax rate is more than twice that of Baltimore County's, which in turn is higher than Anne Arundel, Carroll, Harford and Howard counties. But the city's assessable base of nearly $20 billion is less than half that of Baltimore and Anne Arundel counties, at about $47 billion and $43 billion, respectively, according to the 2006 annual report of the Maryland Department of Assessment and Taxation.

Part of the reason for the disparity is the disproportionate amount of tax-exempt property in the city -- about $9.4 billion worth compared with about $6.2 billion in Baltimore County and $4.7 billion in Anne Arundel, according to the same report. Three years ago, the city instituted an energy tax on nonprofit organizations in exchange for an end to payment-in-lieu-of-taxes on some of its larger tax-exempt institutions. Is it time to revisit the issue of PILOTs again?

And whom do you want tax relief to benefit the most? Long-time homeowners, many of them elderly and on fixed incomes, for whom even the cap limiting tax assessment increases to 4 percent a year is a burden? Or new buyers, for whom the cap doesn't apply? If you modestly raised the cap, one of the lowest in the state, how much could you decrease the overall property tax rate and still come out even?

In the 1990s, the impetus for setting the 150 percent goal was the idea that Baltimore's high property tax rate was inducing residents to leave the city, which was on its way to losing more people that decade than any municipality in the country.

That population loss has largely leveled off. City planners have calculated that the city has the capacity for about another 170,000 residents if the blighted properties were to be redeveloped.

Do you continue to tax residents at current rates and use the money to cut crime and improve schools and other services to make the city attractive as soon as possible to those potential newcomers, knowing that their presence will increase property and income tax revenues and allow future rate cuts? Or do you significantly cut taxes now, giving relief to those who have stayed in the city and in the process perhaps draw in new people more quickly because of the lower rates?


Complicated but fascinating questions, to be sure -- for the campaign trail as well as the task force.