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Baltimore officials approve tax cut for city homeowners

Baltimore’s spending board on Wednesday authorized a small tax cut for city homeowners that Mayor Catherine Pugh included in her budget proposal for next fiscal year.

Since becoming mayor in December 2016, Pugh has continued to fund the phased-in tax credit that began under former Mayor Stephanie Rawlings-Blake. Cumulatively, the targeted homeowners tax credit means city government won’t collect about $30 million it otherwise would from owner-occupied properties in Baltimore.

For a $200,000 house, the average Baltimore homeowner will save about $350 next year due to the cumulative tax cut.

Though the city’s overall property tax rate of $2.248 per $100 of assessed value remains twice that of surrounding counties, the tax break means the average owner-occupied home will pay $2.07 per $100 of assessed value.

The credit applies only to improved assessed value, so it will vary by house. The figure of $2.07 is a city-calculated average of the functional tax rate for owner-occupied homes, officials say.

The tax break is designed to continue through 2020, when the discount for owner-occupied homes would grow to 20 cents.

The board also approved the use of $21 million in “excess” tax revenue to pay for police overtime that surpassed the city’s budget. The city brought in $11 million more than anticipated from transfer taxes and $10 million more from recordation taxes.

That spending decision still requires approval by the City Council.

The Police Department will run well over its $16 million budget for overtime pay for the fiscal year that ends June 30. In March, Baltimore’s budget director said the Police Department had spent more than $36 million on overtime during the fiscal year. A final overtime tally won’t be known until the fiscal year ends.

Pugh said Wednesday the overtime spending is a result of having too few officers in the Police Department — a gap that could take three to five years to fill — and that residents are clamoring for more police on the street.

“There is a shortage of police officers in Baltimore City,” Pugh said.

For years, the Police Department has run millions over budget on overtime spending. But finance officials typically use conservative estimates to project the next year’s tax revenue and then use the excess funds to cover the overtime pay.

Next year’s budget earmarks $20 million for police overtime. Baltimore finance director Henry Raymond has said he expects the Police Department to live within its means.

The city law department is currently auditing the Police Department’s overtime as part of a lawsuit and a federal civil rights decree that requires the agency to study its staffing.

About a dozen affordable housing advocates protested in the Board of Estimates room after the panel voted to approve the spending. They said it was wrong to use excess tax revenue to cover excessive overtime spending instead of helping people find affordable homes.

“When it comes to people’s needs they don’t have the money and then they sneak in $20 million,” said Todd Cherkis, one of the protesters. “That’s thousands of homes rebuilt, that’s 9,000 jobs created in this city washed away with a quick vote.”

The City Council, with the support of its president, is considering legislation that would increase the recordation and transfer taxes to create a dedicated stream of money for affordable housing.

luke.broadwater@baltsun.com

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