Last year, the economic recovery in Maryland and particularly in Baltimore was sputtering, due in no small part to federal government cutbacks. Still, Mayor Stephanie Rawlings-Blake managed to introduce a city budget that included no new taxes or fees, no cuts to services, a 2 percent raise for city workers, investments in some key priorities like street repair and Recreation and Parks — plus a 2-cent reduction in the property tax rate.
This year, the economic recovery looks much more solid. The employment picture is improving, and Baltimore's real estate market is booming. The city recently reported that it was running a surplus in the current fiscal year, thanks in no small part to the biggest jump in property values in the state. Consequently, the mayor's budget includes no new taxes or fees, no cuts to services, a 2 percent raise for city workers and investments in some key priorities like school construction.
What's missing here? Oh yes, the property tax rate. The one Mayor Rawlings-Blake made a big to-do about a couple of years ago in her "Change to Grow" plan, which advocated all manner of tough medicine to reduce the cost of city services and set the stage for a substantial reduction in the single levy that makes Baltimore most uncompetitive with surrounding counties. In 2013, she promised to reduce the rate by 22 percent for homeowners over the course of the next decade — that would be 50 cents per $100 in assessed value.
The tough medicine, we've gotten. The mayor has instituted a variety of small taxes and fees, she's changed the shift schedules for police and firefighters in an effort to control overtime, she's cut employee health benefits, reduced the number of city workers and closed or privatized rec centers. There's no backsliding on that.
But in just the third year of the 10-year plan, she's showing that the tax cuts aren't really such a high priority. Her administration claims this pause in the reduction is no big deal because it is ahead of the pace to achieve the promised reduction, but the only way to make that math work out is to revert to a goal she set in 2011 to reduce the rate 20 cents by 2020 and to forget about the "Change to Grow" goal in whose name she has made all those painful cuts.
To get 50 cents in 10 years would require an average annual reduction of 5 cents. Even if we count the reductions she made before setting the 50-cent goal, she'll only have managed 13.8 cents by year three. That sounds behind the pace to us. Keeping up would have required finding space for just another 1.2-cent reduction this year, which would cost the city about $2.3 million. We find it hard to believe that if she was really determined she could not have found that in a $2.5 billion budget.
It's not that another 1.2 cents off the rate would do much to change the lives of average Baltimoreans. On a house valued at $150,000, it amounts to $18 a year. What's more important is the signal it would send. Not only does the steady effort to reduce taxes help ordinary residents stomach some of the tax breaks the city has doled out for big real estate projects, but by signaling a commitment to the broader goal, it also makes Baltimore a more attractive place for people to invest, whether that means a new apartment tower or a new rooftop deck.
The mayor is blaming weak revenue from the Horseshoe Casino for her inability to cut property taxes this year. Baloney. The city was originally expecting about $14 million from the casino in the next fiscal year, but now that's been downgraded to $8.3 million. Meanwhile, though, property tax revenues are expected to increase by $72 million next year. (Do we think this jump in the tax base is unrelated to the recent rate cuts? No.)
Budget Director Andrew Kleine says the city is also coping with assorted expenses that it did not anticipate in its 10-year plan, and he points to more and larger cuts planned in the years ahead, particularly if the city adopts a municipal trash collection fee that has so far proved a non-starter in the City Council.
Ultimately it's a question of priorities. If reducing the property tax rate is really a central goal of this mayor, she could find a way to do it. But Mayor Rawlings-Blake is showing that she's willing to walk away from her streak of rate cuts when times are good. What should make us confident that she'll resume when doing it gets tougher — if she's even still around to see her plan through?