A mayoral task force report says one of the best long-term ways to reduce Baltimore's highest-in-the-state property tax rate would be to use revenue from legalized gambling - not just the slot machines currently under debate but full-scale casinos.
State leaders have spent a decade debating slot machine gambling, only to decide to let citizens settle the issue in November's election. Table games have long been considered a political non-starter in Maryland.
But the group of 26 business and civic leaders convened by Mayor Sheila Dixon says the city could knock 17 cents off its property tax rate with revenue from casinos. Table games bring in more tourists, it reported, and more wealthy players - both of which could drive up revenue used to ease the property tax rate.
"We really felt in the overall scheme of things from the city's perspective that full casino gambling would be much better for the city," said Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors and co-chairman of the task force.
"The city needs to have a strategy, and part of that strategy is to apply part of the gains that would come from either casino gambling or slots to meaningful property tax reduction," he said.
But even the suggestion of table games in Baltimore - one of more than a dozen ideas the committee considered - could thrust the city into what is expected to be a divisive and hard-fought campaign over slots.
"Slots and casinos are the wrong direction for Baltimore - and the wrong direction for Maryland," a spokeswoman for Comptroller Peter Franchot, leader of the state's slots opposition, said in a statement. "Any revenue that may be generated by this predatory industry will be more than offset by increases in crime, addiction and the destruction of entire communities."
Relying on gambling revenue to reduce property taxes underscores how difficult a task the city might have as it attempts to cut a stubborn property tax rate that officials believe has stifled growth by sending residents and businesses to the suburbs.
For the short term, the panel presented nine recommendations - including raising the income tax, lifting a cap on assessments and collecting more revenue through better commercial assessments - to lower the rate by about 11 percent. For the long run, it proposed a local sales tax.
Baltimore's tax rate is $2.268 per $100 of assessed value.
Applying a model used in Detroit, which has casinos, the committee estimated Baltimore could reap $45.9 million through casino gambling. With only slots, the report estimates the city could collect $32.8 million a year.
In last year's special General Assembly session, lawmakers approved a constitutional amendment that will allow voters to decide whether to place slots parlors in five locations, including Baltimore. State officials estimated the city would receive local impact fees of about $12 million in 2012 and $19 million in 2013.
Dixon commissioned the task force in February. At a conference of local government officials in Cambridge, Dixon said she was "not leaning toward one or the other" of the recommendations.
"I want feedback from the public, and then we will look at all of the options," she said.
Landers and others have stressed that the report's recommendations are meant to be taken not in isolation but as a package. If each of the short-term proposals is approved, he said, most city residents will pay less in property taxes. If long-term recommendations such as gambling revenue are approved, it makes that tax reduction more likely.
Dixon's administration lobbied the General Assembly in favor of using slots gambling revenue to offset property taxes. As part of its proposal, the administration suggested leasing city-owned land to a slots parlor and using the money from that lease.
A City Hall spokesman said he could not estimate how much that lease might be worth but said the administration believed the idea would cut 25 cents from the tax rate.
Sen. George W. Della Jr., a Baltimore Democrat whose district would include the proposed slots parlor, tried to amend the legislation to guarantee that gambling revenue would be used for property tax reduction, but his proposal was defeated. Della said the Dixon administration said that would "tie their hands."
Sen. Lisa A. Gladden, a Democrat whose district includes Pimlico, said it would be "practical" for the city to use slots revenue to reduce the property tax. Gladden, a longtime slots proponent, said that other cities have expanded gambling in order to help balance municipal budgets and that it's time Baltimore wised up.
"The reality is you want to attract homeowners to a community like Baltimore City, and you can't when the property taxes are so high, [public] services are moderate and crime is high," Gladden said. "You need a crazy infusion of cash, and you get that by putting a slots venue on the I-95 corridor."
Members of the City Council have been noncommittal about the report, saying they need time to review it. But tying tax reduction to slots is not the only controversial idea in the report.
Della also criticized the panel's idea of raising the Homestead Tax Credit from 4 percent to 10 percent. That would have the largest short-term effect on the property tax rate - facilitating a roughly $0.092 reduction in taxes for every $100 in assessed value.
But it could also require long-time homeowners to pay more in property taxes - even if all the other short-term proposals of the committee are adopted - because over many years it would capture more of a home's value for taxing purposes than the current 4 percent cap.
"That's a shell game," Della said. "In actuality, there's no benefit there to the taxpayer in the long run. It's like a teaser."
Landers and city officials point out that if they could reduce the city's property tax rate - which is more than twice Baltimore County's - and lift the cap, it would drive up the city's taxable base. An increase in that base would make it easier for the city to lower taxes in the long run.
"It's almost like a dog chasing its tail," Landers said. "We set the cap so low because we set the rate so high. We want to break out of that cycle."
Sun reporter Gadi Dechter contributed to this article.
The city's task force on property taxes will conduct a public hearing at the Poly-Western campus from 7 p.m. to 9 p.m. Jan. 16.
To read the property tax report and supporting documentation, go to: http:--www.baltimorecity.gov/mayor/blueribbon.php