Slots to lower Baltimore property tax rate?
The city's rate of $2.268 per $100 in assessed value is the highest in the state -- more than twice as high as other jurisdictions' rates. (It's also a continued source of complaint for residents and angst among folks who want more people to move into Baltimore.)
The Dixon administration points out that the cut won't be immediate -- and it relies on slots performance. From today's story:
Under the agreement, the casino would provide ground rent to the city via a profit sharing agreement on gross gambling revenues, and those funds won't begin to flow until the casino is operating, which city officials hope will be in 2011. The money from slots must be used for either property tax reduction or school construction, so those funds cannot be used to eliminate expected budget shortfalls in those years. ...According to the deal, the bidders will pay the city $20.8 million when the casino opens, which includes ground rent, property taxes and other revenues, said First Deputy Mayor Andrew Frank. That would provide a minimum five-cent reduction in property taxes. Since the revenue is based on the casino's performance, Frank said, the city's share could grow.
To allow an eight-cent reduction, the parlor would need to produce about $25.4 million a year in revenue. That's what the city is forecasting within five years.
If all those if's come to pass, a city resident paying taxes on a $200,000 assessment would see his or her property tax bill drop from $4,536 to $4,376, a $160 savings.
Thoughts?
Comments
The headline looks good but 8 cents is a pittance. Now i Baltimore City dropped its tax rate to $1.50 (still the highest in the state) they might be able to save tax paying citizens real money ($1536 on your example).
Of course to do that the city might actually have to curb some of its spending....
Posted by: Paul | April 9, 2009 10:41 AM
That's not nearly enough. That works out to about $13 per month.
Posted by: Frank | April 9, 2009 11:28 AM
As Paul said, this is pittance. San Francisco and Boston lowered their property tax in the 80s and 90s, and experienced a renaissance. Why can't Baltimore do it? Property tax revenue would decrease first, but increase in the long run. Slots is not a permanent solution at all. How did SF and boston do it?
Posted by: semiconscious | April 9, 2009 11:57 AM
Good question, semiconscious. When I'm back at work, I'll try to find out. (I'm on leave through June. So yep, I am blogging for free.)
Posted by: Jamie Smith Hopkins | April 9, 2009 12:31 PM
Of course, if the city just collected the proper amount of tax revenue (i.e. going after homestead tax cheats), they could lower the overall tax rate even without building a slots parlor.
Posted by: MCG | April 9, 2009 1:41 PM
City residents should be weary about this deal. They tried something similar in Pennsylvania with slots but property taxes still increased. We got slots, had to pay for Philadelphia's new convention center, and the rest of the money goes into the general fund. It didn't work. The same will likely play out in Baltimore unless people get serious about electing only officials that honestly want to reduce taxes instead of shuffle things around. Property tax relief is critical, especially in today's market.
Posted by: BigDragon | April 9, 2009 1:43 PM
What will be the effect on residential property values nearest the casinos?
If it is to lower the value, is it morally defensible to build casinos there?
If so, why?
Posted by: Cheap Jim | April 9, 2009 9:47 PM
Thanks for covering this on your blog. I have recently started house shopping for my first home. I am young (26), single, and have disposable income. I have no kids that will require education. Statistically speaking, I will require very little in social services. In short whatever jurisdiction I decide to move into will profit from my entering the jurisdiction. That is why I get frustrated at what appears to be the City's attempts to keep me from moving into the City. Next year, I will be hit by the AMT. So, if I do buy in the City, not only do I pay the highest property tax rate in State, I can't deduct it from my federal income tax. That makes a huge difference (more than this $160 they are talking about here). I should be the resident the City is trying to attract. If the City would offer a tax break for people hit by the AMT, it would attract people with a disposable income to the city. I am the resident the City should be welcoming with open arms because I will spend money in the City and will be paying for services that I clearly will not be using, allowing the City to turn a profit on me.
Anyway, this is an informative blog that I have been reading through while trying to find my first home. Thanks for all your hard work.
Posted by: Ace | April 13, 2009 11:53 PM