The mayor goes out on a limb

A year ago, Mayor Stephanie Rawlings-Blake announced an ambitious goal to grow Baltimore's population by 10,000 families in a decade. Today, in her State of the City address, she began to lay out her vision for how to make that goal a reality. She is seeking to increase investments in the things that will make city living more attractive and to reduce the costs that make it unaffordable. Her proposals reflect a clear-eyed view of Baltimore's assets and liabilities and a remarkable willingness to take on politically unpopular causes. Whether she can make it work remains to be seen, but there is no question that Ms. Rawlings-Blake's plans represent a bold new turn for her administration.

Much of what the mayor proposed today amounts to an attempt to control the ever-increasing cost of city government without slashing the services residents rely on, a common theme of her administration. In some cases, that has proved elusive, as in her effort to concentrate city support on a few high-quality recreation centers while turning others over to private operators. In others, such as reforms of retiree health benefits and police and fire pensions, she has realized substantial savings for the public, though in the latter case, she has also faced litigation from the unions.

Now she is proposing to go further, most notably by moving new civilian employees to a 401(k)-style retirement benefit rather than a traditional pension, and creating a hybrid defined contribution/defined benefit plan for new police and fire employees. The details of how she intends to make that transition are important, but the direction is right on. Taxpayers cannot be expected to foot the bill for an expensive benefit that few private sector workers now enjoy. For existing civilian employees, the mayor plans to seek some of the same kinds of reforms she enacted for the police and fire departments, including requiring contributions to the system from workers. Meanwhile, the mayor intends to shrink the size of the city government workforce by 10 percent over the next eight years.

By getting the costs of city government under control, Mayor Rawlings-Blake believes she can begin to ease downward Baltimore's crippling property tax rate — at twice the level in other nearby jurisdictions, it is a powerful disincentive to investment.

But to make more substantial progress, she is proposing to establish a waste handling fee and to offset the cost dollar-for-dollar with property tax cuts. That's a proposal that will require some serious study. The mayor believes that with that plan, she can cut the property tax rate by more than 20 percent, but because she is replacing one revenue source with another, she may be creating winners and losers in unpredictable ways.

That said, the interaction of Baltimore's high tax rate and the homestead tax credit creates disincentives for young families to buy homes in the city, and this proposal could begin to address that problem. Coupled with improvements in recent years in the city's crime rate, higher student test scores and a major push in Annapolis for a multi-billion dollar overhaul of Baltimore's outdated schools, the mayor's new proposals offer the prospect of reversing a decades-long decline.

Baltimore is paying now for decisions made long ago, when its elected leaders found it expedient to make generous promises for retiree health care without setting anything aside to pay for them, or to maintain a bureaucracy that might have been justified when the city's population neared 1 million but is now far too large and costly. Within a decade, those obligations will outstrip tax revenues by billions of dollars if Baltimore does nothing now. The answer is not higher tax rates, it's cutting costs and expanding the tax base, and that is what Ms. Rawlings-Blake's reforms are designed to do.

What the mayor is proposing isn't as radical as the reforms some have called for; she is not, as some have suggested, cutting the property tax rate in half overnight. But she is tackling festering problems that her predecessors have glossed over, and she is doing it before being forced to by a fiscal crisis. Ms. Rawlings-Blake is taking a major political risk. But if she succeeds, she will accomplish what none of her immediate predecessors have managed: Change a vicious cycle of exodus and disinvestment into a virtuous one of growth and redevelopment.

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