Mayor's race on the issues: Property taxes

With the field now set for Baltimore's mayoral primaries, candidates have begun issuing detailed proposals on the issues facing the city. As they do, we will provide occasional analysis of the pros and cons of their ideas, starting with plans to cut property taxes by Councilmen Nick Mosby and Carl Stokes. Later this week, we'll tackle the crime fighting proposals by Sheila Dixon and Elizabeth Embry.

Competing plans for how much to cut the city's property tax rate and how fast dominated the 2011 mayoral race in a way we're unlikely to see in post-Freddie Gray Baltimore. Still, the issue is important. The disparity between the rate in the city and the surrounding counties serves as a significant disincentive for people to move to the city and stay here. Baltimore's property tax rate stifles investment in poor and marginal neighborhoods and contributes to blight.


Mr. Mosby's plan calls for the property tax rate for owner-occupied homes to be reduced to $1.80 per $100 in assessed value (down from the current effective rate of $2.13) and to $2.10 for others (down from the current $2.248). In many respects, it is similar to Mayor Stephanie Rawlings-Blake's plan to gradually reduce the property tax rate, including in its most significant feature: the imposition of a solid waste management fee. More than half of his proposed reduction is paid for by creating such a fee.

Mr. Mosby and other proponents of that idea note that other jurisdictions, including Anne Arundel and Howard counties, have solid waste fees separate from their property taxes, so establishing such a fund for Baltimore City, they say, would create an apples-to-apples comparison for property taxes. Of course, the city's chief competitor for residents — Baltimore County — doesn't have a trash fee, which undercuts the argument. More substantively, the policy risks being regressive, in that unless properly designed it could wind up saving owners of the city's most expensive property tremendously while saving little for those whose houses are worth less. Also of note: the idea has proven wildly unpopular with residents and the City Council, which is why Ms. Rawlings-Blake didn't enact it.

Other elements of the Mosby plan show real promise — like charging a higher tax rate for vacant properties than occupied ones, dedicating a portion of the revenues associated with increasing assessments to reducing the tax rate and identifying specific inefficiencies in city government that could be eliminated to pay for tax cuts. There are legitimate questions about whether he can achieve the savings he's promising on things like the municipal telephone system, but at least he's thinking about ways the city can spend less.

Mr. Stokes has only released the broad outlines of his property tax plan, but what he has said so far is problematic. He is promising a 40 percent to 50 percent reduction to the rate over a five to eight year period, which he says would be "'earned' through a corresponding increase in the city's revenue base, implemented responsibly without cutting investments in critical programs, like education." It's a worthy goal, to be sure, but a bit overly optimistic. Mr. Stokes is a consistent critic of the city's use of tax breaks for big developments, but eliminating them wouldn't come close to paying for a cut of that magnitude. Moreover, rising assessments in recent years have resulted in reductions in state aid for education, which may soon force the city to begin contributing more local funds to the schools, in turn limiting the funds available to cut taxes.

The most substantial element Mr. Stokes identified to pay for his tax cut is one he has targeted before: the Homestead Property Tax Credit, which limits how much a property's taxable assessment can increase from year to year. In the city, the cap is 4 percent, and Mr. Stokes has previously advocated temporarily increasing it to the maximum level allowed under state law — 10 percent — and plowing the proceeds into reduced rates. For some homeowners, particularly those new to the city, that would probably be a good deal, but for others, particularly those who have lived in the same home for decades, it might not. Mr. Stokes proposes protecting low-income homeowners with a special tax credit, but that in turn would limit how much of the new revenue from lifting the cap could go into lowering rates, further exacerbating the problem of creating winners and losers.

Other ideas Mr. Stokes proposed are clearly warranted, though, such as working to improve the assessment process to increase consistency and accuracy and targeting tax-exempt property leased to for-profit businesses. It's also worth noting that Mr. Stokes placed his property tax proposal in the context of a far-reaching economic development plan, which warrants later analysis in its own right.

We applaud both Mr. Mosby and Mr. Stokes for expressing a commitment to reducing the property tax rate. Neither candidate's plan is perfect, but we give the edge so far to Mr. Mosby for offering a generally realistic assessment of what can be accomplished during the next four years. For too long, the tax rate and the city's population and economy have been tied in a negative cycle of decline, and that needs to be changed into a virtuous cycle of growth. It won't happen overnight, and there are no magic solutions to achieve it, other than electing a mayor who will make it a priority. We look forward to hearing other candidates offer their commitment to the cause and ideas for advancing it in the weeks ahead.