Mr. President, Madam Comptroller, Senators and Delegates, members of the City Council, clergy, colleagues in public service, committed people of Baltimore—thank you for the opportunity to report on the progress of our city and to renew our commitment to the great cause of a growing Baltimore.
Mr. President, thank you for the invitation to speak before the Council and for your candor, conscience, and commitment to Baltimore's future. We share an understanding that the privilege to lead comes from the people—and that our success is measured in our service toward them and in the achievement of tangible results for the greater good.
To every member of this council—nothing works without your hard work, dedication, and collaboration. As I look back on what we have accomplished—with your wisdom, ingenuity, and support—I applaud your courage to stand strong as a body for the sake of progress, and your personal independence only makes Baltimore stronger.
Lt. Governor Brown, thank you and the O'Malley-Brown administration for your support of our efforts to make Baltimore a better, safer, stronger—and growing city.
Attorney General Gansler, States Attorney Bernstein, Clerk of the Courts Conaway, Sheriff Anderson, Judge Baylor-Thompson, and Judge Holland, thank you all for joining us today to renew your commitment to supporting our vision of Baltimore becoming the safest big city in America.
Today we affirm that we have the power to create the future that we want for Baltimore's families. We have the power to overcome the difficulties of economic and budget pressures. If we have the courage to use that power, our city's lingering narrative of post-industrial decline will not be the story of our future.
Our charge is to grow Baltimore, to rebuild a thriving city where more families choose to live—a place where children find educational opportunity, where neighbors live in safety without abandoned blight, and where businesses make new investments, creating jobs for our people.
Together, we believe a new urban story of growth can emerge from our collective choices.
The new ideas and solutions I will propose today—so that we may pursue them in partnership—will be realistic and based in fact. The simple arithmetic of declining revenues and increasing expenses—and our own denial of it—have been the enemy of progress.
Because the old ways of doing city business must end. Our future will rely on our ability to evolve. As a community, we must reject the status quo and embrace a call for bold action. Baltimore's citizens demand and deserve major change.
Our work to get Baltimore growing again must be grounded first in stable city finances. It is the only sustainable path forward. It is a defining fight of our generation of leadership, and we—our local government, our businesses, our communities—are empowered to make it happen.
We must change to grow.
Three Years of Progress
Over the last three years, we have achieved more results toward meeting the fundamental challenges that caused Baltimore's decline and impeded our ability to cement a turnaround.
By reducing crime—the single most devastating driver of family flight—Baltimore has ended the spiral of endless desperation and moved forward with a new, hopeful belief in the promise of safer neighborhoods.
And instead of tolerating a perverse acceptance of senseless murder as a foregone conclusion, out of our control—we now share a demand for a better government response and a stronger community commitment to the protection of all our citizen's lives.
Since 2009, the number of murders and shootings in our city has been driven down to historic lows. Scores of families have been spared the tragedy of the loss of a loved one to gun violence. In 2012, over 300 fewer victims suffered the brutality of violent crime, compared to just the year before. And five fewer youths—with their futures before them—had their lives cut down and cut short.
It is not a straight-line trend of progress. We've suffered painful setbacks: Precious lives were lost that cannot be brought back.
Our work to reduce violence would not be possible without the proud men and women of the Baltimore Police Department, who put their lives in danger. They have worked harder than ever before, and we must give them the resources and tools they need to strengthen their efforts:
- A fully staffed police department, even when faced with tough budgets.
- Smarter deployments, with more foot patrols in our neighborhoods.
- The most effective technology, including a state-of-the-art crime lab and an expanding crime camera network—already our network has grown by 100 new cameras since 2010.
And we must continue to work hand-in-hand with state and federal criminal justice partners to increase resources, case quality, and criminal prosecutions; and to divert nonviolent offenders into treatment—especially our young people.
Under Commissioner Batts, we continue to focus on getting illegal guns off the streets and targeting violent offenders and gangs—yes, that small portion of our population that is responsible for the overwhelming majority of violence and terror.
Under his leadership, we are establishing a renewed partnership between police and neighborhoods that is built upon the idea of simple trust—by demanding professional courtesy and respect for all city residents from every officer, and by making clear that the badge is a symbol of honor that must be worn by only those of sterling character.
While we have demonstrated that we have the local power to reduce crime and violence—the importation of deadly guns into America's cities and the ability of criminals and the disturbed to get their hands on them is rooted in a larger problem.
How can we live in a country where gun violence is allowed to rage in our most dynamic urban centers—and to shatter the sense of security in suburban schools and communities?
I will continue to work with state and federal elected leaders to answer this question and develop policies to reduce gun violence. We need to muster political courage to take bold action. The problem and causes of gun violence can no longer be ignored or obfuscated by the gun lobby. We must stand for the safety of our citizens and children.
Working closely with County Executive Rushern Baker, Baltimore and Prince George's County are standing together, fighting for the same causes. From National Harbor to the Inner Harbor, we've stood together on jobs, on equality, on education. And today, we stand together to reduce gun violence.
Please join me in welcoming a special leader in this movement to make Maryland safer, Prince George's County Executive Rushern Baker. Together, our jurisdictions represent nearly a million and a half Marylanders, and our voices will be heard!
I am confident Maryland's citizens will join together to support sweeping reforms in state and federal gun laws. Governor O'Malley and President Obama have both proposed bold legislation worthy of our full support.
If we stand with one voice, we can ban assault weapons and high capacity guns, increase criminal penalties for straw purchases, strengthen record-keeping by gun dealers, and tighten license requirements for gun purchases.
Stronger gun laws will make a difference. Our representative governments can make us safer. And we must act now to help save lives.
In 2012, Baltimore experienced the lowest number of fire deaths on record. The number of tragedies has declined each year since 2009. The reduction comes as the men and women of the Fire Department have increased efforts to distribute free smoke alarms to city residents.
Please join me in thanking our firefighters.
Since 2010, Fire Chief Jim Clack, this administration, and the City Council have worked together to prevent firefighter layoffs—and we have reduced nightly closures of fire companies while improving response times.
Today, when it comes to fire safety, Baltimore is undeniably safer than just three years ago. Chief Clack, thank you for your leadership. Together, we will not be satisfied until we achieve our goal of zero fire deaths.
Baltimore is a city of neighborhoods, and they are the foundation of our future prosperity. The biggest challenge confronting our neighborhoods is the scourge of 50 years of disinvestment and the thousands of vacant homes left behind. They are a cancer to our communities, and Vacants to Value is showing real progress toward addressing the problem.
Since launching the initiative, 250 vacants have been torn down, nearly a thousand more are being rehabbed, and sales of vacant city-owned properties have increased five-fold. More than 30 acres of vacant lots have been turned over to create community green spaces.
We are getting tough on speculators and irresponsible, absentee owners and have issued nearly a thousand citations. This streamlined code enforcement effort forces them to fix-up their properties or sell to someone who will. And it has spurred $47 million in private investment in our neighborhoods.
We are also supporting a pipeline of new homebuyers by providing incentives to help with down payments and closing costs. More than 140 new homeowners have received $10,000 homeownership grants through Vacants to Value.
I want put a human face on this progress and make it part of an annual tradition with the State of the City Address. Ms. Destiny Junior is a strong young woman with a bright future. She works full-time to serve the elderly at an adult day care center. Destiny moved from Baltimore County to McElderry Park with the help of Vacants to Value incentives—qualifying for $15,000 in closing costs assistance.
Please join me in thanking Housing Commissioner Graziano, and let's welcome this proud new homeowner to Baltimore!
A growing city must have a thriving economy. City government has an important role in promoting economic development, job creation, and job readiness. Rather than pitting neighborhoods against each other, we believe in One City, because new downtown investment and new neighborhood investment are not mutually exclusive.
Over the last three years, we have shifted the strategy to do more to support the city's major employment sectors—including our port, our health care, education and research institutions, and our tourism sector.
For example, at this time last year, the future of the Port of Baltimore—an economic engine that supports more than 40,000 jobs in the region—faced unnecessary uncertainty. The state began upgrading the port for the giant container ships that will come with the expansion of the Panama Canal, with deeper dredging and larger cranes. At the city level, we started rebuilding Broening Highway to support additional freight traffic.
But a related regional project that would allow double-stacked trains to bypass the Howard Street Tunnel, the CSX Intermodal Facility, was in serious jeopardy. The suburban jurisdictions selected for study balked, stalling construction of this vital transportation link.
The Washington Post even warned on its front page that, without the facility, Baltimore "could suffer a devastating blow to one of the few vibrant engines that keep its economy afloat."
I wasn't about to let that happen. So I told CSX: Bring the $90 million project here to Baltimore City, the birthplace of American railroads—and they agreed. Last month, Governor O'Malley prioritized $30 million to support construction, which is scheduled to finish in May 2015—in time for the opening of the Panama Canal expansion. All of these actions will help bring jobs while securing the economic future of the Port for generations.
We are spearheading new "anchor institution" initiatives by partnering closely with Baltimore's campuses of higher learning and medicine to reinvest in surrounding neighborhoods. The future of the city and the future these proud institutions are inextricably linked.
Joining together, from the Westside to Midtown, from Homewood to Hillen, we are breaking down old barriers between the great halls of ivy and the greater community. For new PhDs, residency interns, and student researchers, it's an opportunity to thrive in a creative urban setting—and no doubt, more young minds will choose to build a life in Baltimore.
This administration will continue to strengthen small businesses, job training, and job opportunities for city residents. This past year alone:
- We created the city’s first micro-loan program to provide financing to small businesses, including retail, service providers, and contractors.
- We created the Mayor’s Advisory Council on Minority and Women-Owned Businesses to develop bold new strategies and help strengthen Minority Businesses.
- We created Accelerate Baltimore to support start-ups that are developing pioneering technologies.
- We executed a local jobs agreement with Caesars Entertainment to give city residents priority for jobs at the newly-approved casino.
- We opened four new community job hubs to help city residents obtain skills for 21st century jobs and to find gainful employment. We plan to add additional hubs this year.
- We appointed Brenda McKenzie to lead BDC into the future, with a renewed focus on neighborhood businesses and job creation.
Finally, 2012 was a great year for supporting our tourism and hospitality economy. The City was host to several fantastic civic events drawing hundreds of thousands of people and millions in economic impact—Sailabration, the Grand Prix, Artscape, the African American Festival. We enjoyed post-season games of Orioles magic, and our Ravens won the Super Bowl!
These events showcased our city on the national stage and filled neighborhoods with pride and celebration.
Today, I ask you to support our once-in-a-generation effort to rewrite and reform the City's outdated zoning code. The current code and process create a maze of inflexible rules and unpredictable outcomes that can stifle investment. This needs to change.
We have opportunity with TransForm Baltimore to make the process more transparent and predictable—promoting growth while preserving our unique character. Changing the code will enable us to create Transit-Oriented Developments, including along the proposed Red Line. And it will make it easier to adapt old warehouses into artist studios, turn vacant lots into urban farms, and promote bioscience manufacturing.
I understand that the details of this change can be challenging, but we should stay focused on the ultimate goal of approving a modern zoning code for Baltimore's future. Because we must change to grow.
Renewing the City-State Partnership for Schools
Public education is the cornerstone of a growing city. Families have a fundamental right to access a good education in quality school buildings. And providing more opportunities for families to send their children to good public schools will help get Baltimore growing again.
We also know that public education helps break down economic and racial barriers and the ugly cycle of poverty. And the poverty of a government, on its own, is no excuse for failing schools, mismanagement, and bloated bureaucracy.
It was these principles that my father fought for in the 1990's. With new state resources came new accountability to improve student outcomes. The landmark 1997 city-state partnership has made a difference in student achievement.
Under the leadership of Dr. Andres Alonso, student test scores have improved dramatically, North Avenue has shrunk and is better managed, school enrollment has increased steadily year after year, and the number of dropouts has been cut in half. Dozens of new charter and transformational schools have come online, and public school choice is available to most middle and high school students. Thank you Dr. Alonso for your unwavering commitment to the interests of our students.
The fight for better schools is far from over. While teachers and students are making progress, our buildings and classrooms are inadequate and ill-equipped for the 21st century. In too many cases, conditions are downright deplorable and simply unjust.
The state's school system as a whole has achieved a half-decade of national praise and recognition—but you'd be hard pressed to say Maryland's system of public education is equitable among our local jurisdictions. There must be a stronger statewide recognition of the enormous capital needs of local school districts with the oldest buildings.
Our state's constitution is clear. The General Assembly shall "establish throughout the state a thorough and efficient system of free public schools; and shall provide…for their maintenance." The framers of our state constitution did not intend for a child's zip code or the wealth of a local tax base to be the determining factors of whether or not the school they attend is in good repair—but that is the system we have inherited.
Baltimore City is the one of the poorest jurisdictions in the state and has the highest tax effort. A staggering 84% of our students come from low-income families, and we have the oldest, most dilapidated buildings.
We understand that Baltimore must do more locally, and our strategy is not to simply beg the state for a blank check with no strings attached. My father, Delegate Pete Rawlings taught me that approach is just as wrong. We have a responsibility to take our own local action and put forward viable solutions.
In 2012, with the support of education advocates—and against the demands of powerful special interests—this City Council approved an historic increase in new funding for school renovation. Make no mistake—it is largest local source of school renovation funding ever approved in Baltimore's modern history. No one can point to this chamber and say the city didn't put more skin in the game. At the same time, our school system partners have put forward a tough, 220-page, comprehensive plan to right-size & modernize school buildings.
Here's a summary of our local action: This administration and the City Council have made tough choices, increasing taxes to provide dedicated funding for school renovation. The local school board has also made tough choices, approving a plan to relocate or close 29 schools and programs. At the same time, the local school system itself has improved student outcomes, reduced bureaucracy, and put forward a thoughtful plan to finance a major reconstruction effort.
Now it's time for the General Assembly join us with a renewed, landmark city-state partnership—with resources, flexibility, and shared accountability to rebuild our schools. Conditions have reached a crisis point, and a big solution is required. 85,000 of Maryland's children are depending on it.
I am open to any compromise or alternative that does not comprise a child's right to attend a quality school in good repair—but keeping the status quo will only serve to fail our students—and that is unacceptable. We must find a new way to meet our shared objective of improving public school buildings for every child, no matter where they live in Maryland.
Change to Grow
At the same time we seek a renewed partnership with state government—Baltimore must implement major fiscal reforms.
For over 50 years, Baltimore's story has been dominated by a narrative of post-industrial decline. From 1950 to 2000, the city lost a third of its population. Jobs disappeared, crime rates rose, schools deteriorated, and many neighborhoods destabilized. City government itself was left with a legacy of high taxes, growing liabilities, and crumbling infrastructure. But over the last several years, a new urban story is beginning to emerge.
Population loss is slowing to a near halt, and many neighborhoods are experiencing new growth. Baltimore is safer, public education is improving with growing enrollment, more vacants are being rehabbed, and our businesses and institutions have made new investments.
Since 2010, this administration and the City Council have worked together to close $300 million in budget deficits. We averted an immediate pension crisis, eliminated duplicative programs, and began to cut the property tax burden—all while keeping our core services funded, including public safety and public education.
As a result of these tough actions, Baltimore held its own and maintained its bond rating during the worst recession since the great depression, and quality-of-life for city residents has generally improved. Today, we've outlined the progress made over the last three years—but much more work remains to get Baltimore growing again.
The question, for this generation of city leadership, is this: Will Baltimore cement a true turnaround toward a future of growth? Or will we allow our hard-fought victories to become just a momentary pause—a footnote—in a continuing story of decline.
More than a year ago, I said we needed a comprehensive approach to deal with the City's structural problems and I called for the creation of the City's first Ten-Year Financial Plan.
Many cities only engage in long-term financial planning as a reaction to receivership, state takeovers, and bond rating downgrades. In Baltimore it is a proactive effort so that we never reach that point—and so we can choose our destiny, rather than have it forced upon us.
With such a plan in place, Baltimore can end the cycle of deficits that have eroded services and constantly put the City on the defense, instead of investing in renewal. The effort has revealed, for the first time, the true scope of our fiscal challenges.
Since taking office, I've always pledged to talk straight and never sugarcoat our problems. Truth is the first step of any real solution. With that, let me be candid about what we must confront.
First, our city faces a serious structural deficit between slow-growing revenues and faster-growing expenses. Without corrective action, this cumulative shortfall totals nearly $750 million over nine years. To put that number into perspective, it's more than we spend on Police, Fire, Health, and Recreation and Parks annually.
The deficit is largely driven by growing healthcare and pension costs. Even with the reforms we have made, these combined costs are projected to grow by another 40%. And there is a major imbalance in how we compensate our employees. The costs of outdated benefits have crippled our ability to pay workers what they truly deserve in their paychecks.
Second, our city faces a $1 billion infrastructure deficit over the next decade. Roads, bridges, and City buildings—including rec centers, and police and fire stations—need significant investment just to meet reasonable standards.
Third, our city has unfunded retiree liabilities of more than $3 billion, and we must take meaningful actions now in order to afford future benefits.
At the same time, our property tax rate is impeding the City's ability to compete for growth. We all know Baltimore cannot simply hike property tax rates to improve our financial situation. To do so would almost guarantee further population and job losses.
Every elected official, community, institution, and business with a stake in Baltimore's future should share a deep concern for these facts. It is reality. To put our head in the sand and ignore the problem would be an unforgivable disservice to the people we represent and the city we all love.
We cannot build the foundation of a growing city on the mud of a fiscal swamp. The status quo is unsustainable, and the price of inaction is clear. We must change to grow.
Since last year's election, and after a year of careful study with national experts, we are prepared to propose a bold set of major reforms—to eliminate the structural deficit and protect basic services from devastating cuts, to make modern investments in civic infrastructure while reducing neighborhood blight, and to further cut the property tax burden on homeowners. Each of these will help retain and attract residents and jobs.
The Ten-Year Financial Plan requires tough trade-offs and major changes in past practices, but it also makes investments that reward the future.
Let me outline some of the new proposals we should pursue together:
First, we must rebalance the way we compensate our hard-working employees by reforming outdated, unsustainable benefits and instead invest in better wages up-front. Baltimore's pension system for civilian workers is the only large system in Maryland that doesn't require any employee contribution. That must change.
At the same time, we can use savings to increase salaries. And we will bring the elected official retirement plan in-line with the civilian retirement plan. We must shift to a 401(k)-style retirement plan for all new civilian hires. The private sector has adjusted to this model. It's time for Baltimore to change.
We've implemented pension reforms for current public safety personnel, and the overwhelming majority of reforms were upheld in federal court. At my direction, the Law Department will propose curative legislation to address the single provision that was not upheld while we seek appeal.
For new public safety hires, we should create a hybrid retirement plan that keeps our benefits competitive but reduces risk and allows us to improve salaries up-front.
We need to expand wellness programs, including incentives for fitness and smoking cessation, to promote a healthier workforce and reduce costs. And we need an eligibility audit right away to ensure that all health coverage is legitimate.
We must make increased payments to pay down future benefit liabilities. Generations of employees will count on these benefits when they retire. We can't let them down.
Second, we must make our government more efficient and smaller. We need to invest in technology and automation, streamline workflow, and break down the silos of bureaucracy to improve productivity and save taxpayer dollars. We must modernize our vehicle fleet to reduce maintenance costs while improving the equipment used to deliver city services.
Baltimore's firefighters are the best in America, but the current 42-hour shift schedule is outdated and inefficient. Among the 25 largest U.S. cities, including Baltimore, 19 fire departments have work schedules exceeding ours, with a median work week of 52 hours. We must work with our fire unions to negotiate a new schedule—with significantly higher pay—to reduce inefficiencies and prevent the constant threat of firehouse closures.
Altogether, over the next ten years, we can reduce the size of our workforce by at least 10%—through a combination of attrition and eliminating vacant positions. We can achieve this goal without major layoffs and without reducing the quality of City services.
Third, we must invest in infrastructure by increasing pay-as-you-go funding in our budgets and increasing our borrowing capacity, while still protecting our bond rating.
Fourth, we must create a new solid waste enterprise for trash, recycling, and sanitation by collecting a user fee, as is done in other Maryland counties. We can use all the savings to cut property taxes, dollar-for-dollar. We will also move forward with a state-mandated storm water charge to rebuild crumbling storm drains and fund greening projects in order to improve the water quality of city streams and our harbor.
Finally, I will not allow the structural deficit to be balanced solely on the backs of city residents and employees—not on my watch. Tourists, commuters, tax-exempt entities, and private developers will be part of the long-term solution.
We can better align and target economic development tax incentives to maximize their impact and ensure positive return on city subsidies.
Nonresident commuters who use our transportation network and city parking garages will continue to pay to support services such as our Charm City Circulator.
The voluntary PILOT agreement with some tax-exempt entities expires in 2016, and we will need to renew a discussion with the broader nonprofit community—which accounts for more than $4 billion in tax-exempt property.
If we implement all these changes, we can reward Baltimore's future:
- We will correct Baltimore’s structural deficit and protect police, fire, sanitation, and recreation from future cuts and service erosion.
- We can sustain our commitment to school renovations over the long term.
- We can prevent furloughs and pay freezes, raise employee take-home pay, and provide affordable, competitive benefits—helping us attract and retain the best workforce.
- We can advance a major “demolition surge” of vacant homes—tearing down more than 4,000 vacant structures. This plan quadruples local dollars for Vacants to Value demolitions to more than $100 million over ten years. And, the investment will be front-loaded with $10 million in city funds combined with another $9 million from the Maryland Attorney General’s mortgage settlement.
- We can significantly increase capital funding to rebuild ten rec centers as part of a new network of larger, higher-quality community centers.
- We can expand local funding for transportation, including repairing roads and bridges, while seeking a renewed state commitment for highway revenue, which has declined dramatically in recent years. Each of these new infrastructure investments—totaling more than $370 million over ten years—will not only reward the future but also provide a local stimulus to support job creation.
- We can create incentives to convert vacant office buildings and construct new apartments downtown and in key neighborhood corridors. This will bring new life and vibrancy to our city, attracting families and improving our tax base over the long run.
Finally, we can use much of the savings from the new solid waste and storm water enterprises and other initiatives to cut property taxes for homeowners by nearly 50 cents—a reduction of more than 22% over the life of the plan. At the critical time when families are making the choice to live in Baltimore or stay in Baltimore, our property taxes will be more competitive, and more families will choose to stay.
This plan doesn’t solve all our problems, no realistic plan ever does. But it will show with greater confidence that Baltimore, more than any other city in America, is taking responsibility and getting its own house in order.
It will send a message to residents that Baltimore will be a better place to live. It will show markets and businesses that Baltimore will be better place to invest. And it tells the state and federal governments that we’re serious and deserving of increased support.
In the coming weeks and months, I will present many of the specific details of this financial plan. Believe me, I do this with complete sincerity and humility. I only want to change Baltimore for the better. If anything, the Financial Plan will serve future mayors and City Councils before it serves our own politics. It is born from a belief that if a public servant seeks to govern for the greater good—even difficult reforms will be accepted as the right choices for the future.
The state of the city is in our hands. We have the power to make change.
This local government—this generation of leaders—has demonstrated the courage to make tough choices and the wisdom to make investments that reward the future.
Our people hope and hunger for change and reform. We’ve come too far and made too much progress to turn back to old ways of doing business. Baltimore is on the cusp of a proud renewal.
Now is the time. We can change to grow.
Thank you. God bless you, and God bless Baltimore.