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Baltimore has been fiscally responsible

Several comments were made by leaders in Annapolis recently criticizing Baltimore on its fiscal management and chastising us for coming to Annapolis looking for a bail out. Upon the Senate's approval of the state budget last week, I feel the need to tell the story of a city that is working hard to reach financial solvency ("Thornton tells lawmakers city schools will lay off 100 central office staff," April 3).

I'd like to focus on the historic budget accomplishments of the city in the last several years. When Mayor Stephanie Rawlings-Blake and the City Council entered office we faced a brutal structural deficit of $750 million, $1.1 billion worth of capital needs, not including schools and utilities and $3.2 billion in unfunded pension and health care liabilities. The mayor charged her cabinet and finance department to fix this problem in the short term but more importantly, to craft a long-term plan to avoid a similar legacy for her successors.

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While weathering a historic national recession, the city began implementing its first 10-year financial plan, known as "Change to Grow." Thanks to an early response to the weakening economy, disciplined budgets and a long-term financial plan, the city is on a more sustainable path than before the Great Recession. It has cut the 10-year structural budget deficit by more than half from $750 million to $350 million. In addition, we have reduced health benefit costs by nearly $100 million a year compared to actuarial projections. The "effective" property tax rate for homeowners has been lowered by 13 cents per $100 (6 percent) and the city is on track to meet the mayor's commitment for a 20-cent reduction by 2020. Further, the city has reduced the city's unfunded retiree health care costs by two-thirds, grown the budget stabilization reserve to over $100 million and reformed their pension programs to protect retirees and taxpayers.

In 2014, Standard & Poor's upgraded the city's bond rating to AA even though Baltimore's median household income is well below the median for AA rated cities and its debt load is higher. The rating is a testament to sound fiscal management. Good news notwithstanding, the city's fiscal future is still at risk.

Our school system under the leadership of the Board of School Commissioners and Gregory Thornton is also on a course of fiscal stewardship. Their goal is not simply to address short-term recurring pressures and balances in this year's budget, but to ensure the long-term sustainability of the organization. Internal evaluations are underway to align funding to district priorities, re-directing resources to vital, core areas and eliminating duplication across teams and departments. Other potential opportunities for savings will include the elimination of temporary contract employees, transportation contract savings and working with union partners to find savings. So far, the school system has identified $63.7 million in potential savings. With these changes and a more focused, structural budget process, Baltimore City Public Schools will emerge a stronger, more effective organization.

Baltimore has unique challenges compared to the 23 counties in Maryland, the depth of which are not fully comprehended by non-Baltimoreans and newer members of the legislature. Our poverty rate of 23.8 percent is 2.5 times the statewide rate and our crime rate is nearly double the statewide average, forcing the city to spend twice as much on public safety compared to the rest of the state. Despite this tremendous obligation, according to the State's Department of Legislative Services, the city's overall spending per capita on education, libraries, public works and public safety combined is second only to Montgomery County with only a difference of $8 per capita. This demonstrates that Baltimore is investing heavily to serve its residents and has many pressing needs in addition to public safety and education.

The city's financial picture would not be complete without a discussion on taxes and tax effort. A full 30 percent of the city's property is tax exempt, representing one-third of the entire state's tax exempt property. These properties constrain the city's tax base and help explain its high property tax rate. Additionally, as measured by the aforementioned DLS, Baltimore ranks 22nd (out of 24 subdivisions) in tax capacity and first in tax effort representing a 56 percent tax effort above the statewide average.

It should be clear that the city is not coming to state government with hat in hand and is using every revenue source possible to create fiscal independence, but there simply isn't enough to balance the books yet. I don't know of another city in America with a better story of fiscal stewardship through the Great Recession and its aftermath. I wish I could say we are done with the tough financial work, but we are not.

Baltimore, my city, is reliant on the historical funding partnerships with the state. This year's state budget reflects that collaboration and we are thankful for the continued partnership.

Sen. Nathaniel J. McFadden, Baltimore

The writer, a Democrat, represents the 45th Legislative District.

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