Cutting Baltimore’s property tax rate: The devil is in the details | COMMENTARY

It doesn’t require a graduate degree in economics to recognize that Baltimore’s high property tax rate — roughly twice that of surrounding jurisdictions — does the city enormous harm. When it’s time for a prospective home or business owner to decide whether to invest where the annual property tax bill is “X” or where it’s “double-X,” the consequences are clear enough: People flee. So much so that it used to be fairly standard for mayors to include a small property tax reduction in their annual budgets just to show they’re paying attention. But it’s been about a decade since that has happened, and anti-tax advocates have grown restless.

Now, a group calling itself Renew Baltimore is pushing an ambitious plan to force the city, through a charter amendment, to reduce over six years the tax rate from 2.248% of assessed value to 1.25%. The effort requires them to gather 10,000 signatures of registered city voters to get it on the November ballot and then for a majority to approve it. And in a recent meeting with The Baltimore Sun Editorial Board, organizers said they are halfway to their signature goal.

Sounds great, right?

Well, not so fast.

The problem is that property taxes represent by far the single largest source of revenue for the city of Baltimore, and a sudden and dramatic reduction in revenue (six years qualifies as “sudden” in long-term fiscal planning) inevitably risks translating into a sharp reduction in spending or a sharp increase in alternative sources of revenue. Or, most likely, both.

That’s just one of the reasons why it’s been curious that Renew Baltimore has pitched their plan as an effort to enhance “equity.” It’s certainly reasonable to point out that the city’s highly inequitable and longtime practice of granting high-value commercial developments special tax abatements in the name of economic development is problematic. But it’s also safe to assume that the greatest beneficiaries of any across-the-board property tax cut will be the folks owning the most valuable properties. That’s just math. And on the other side of the ledger, when it’s time to cut city services like public education, it’s also pretty safe to assume that low-income residents will be hit the hardest. That’s just reality.

Again, that’s not to disparage the goal here, but there’s a lot of too-good-to-be-true in Renew Baltimore’s claims about how everyone ends up happily ever after. The group is banking on a windfall of investment in Baltimore if their amendment (and a related one, needed to alter conflicting language in the charter) passes, but what happens if we cut it and investors don’t come at all or not quickly enough? The only winners, then, will be the well-off. The rest will face diminished services in an already struggling city and, for some, a drop in property taxes that doesn’t make up for that loss.

Why not stretch it over more years? That’s what Open Society Institute-Baltimore once proposed in a 25-year plan that reduces taxes a few percentage points per year. Renew Baltimore might also give city leaders some kind of out, like a super-majority vote on the Baltimore City Council if times get tough — another pandemic or a Katrina-like natural disaster, for example. Organizers say they fret that elected leaders just don’t have the heart to stick with a serious tax cut. They are probably right. But if voters reelect them anyway, what does that say about democracy? Isn’t it possible that voters simply recognize that you can’t get something (a tax break) for nothing (no corresponding reduction in government spending)?

Finally, Renew Baltimore thinks their timing is quite good, and they’ve assembled a coalition of credible individuals — including former city solicitor and federal court judge, Andre M. Davis — to argue that recent federal pandemic relief aid and anticipated revenue from some pending civil litigation (including against opioid makers) offers some financial flexibility. Perhaps there’s some truth here, but we haven’t detected any shortage of unmet needs in Baltimore lately, and one hopes that any opioid settlement would go primarily to helping the victims, not to backfill the city budget so that the owner of a $1 million waterfront condo might save hundreds of dollars each month.

Caution is required, and that means taking our medicine (or our tax giveaways) in smaller doses. Meanwhile, if Renew Baltimore is serious about equity, we could suggest more targeted and immediate forms of aid that could make home buying more affordable for low-income families, beginning with advising them on how to appeal assessment increases caused by out-of-town speculators scooping up vacant homes at auction, as reported by this newspaper on July 7. Let’s hold our civic leaders accountable, not tie their hands on such a key element of governance.

Baltimore Sun editorial writers offer opinions and analysis on news and issues relevant to readers. They operate separately from the newsroom.