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April 9, 2009

Slots to lower Baltimore property tax rate?

The group that wants to run a slots parlor in Baltimore has agreed to a deal that -- city officials say -- could mean an eight-cent reduction in the property tax rate, as Annie Linskey and Gadi Dechter report today.

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?

Posted by Jamie Smith Hopkins at 9:56 AM | | Comments (9)
Categories: Property taxes
        

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....

That's not nearly enough. That works out to about $13 per month.

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?

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.)

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.

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.

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?

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.

What is the history of Baltimore city's high property tax rate? When did the city's tax rate balloon so far out of line with the surrounding jurisdictions and why?

If homes were worth 50-100K maybe >2X the tax rate of surrounding jurisdictions would make sense but since the average "decent" home in a "good" neighborhood in Baltimore city is >200K the property tax rate is oppressive and will deter middle class people from moving into the city.

What would the city have done (in terms of revenue) if there had been no rapid escalation of home prices during the early 2000's? Is the current 2.4% tax rate still justified? People who have lived here for a long time should have the homestead exemption credit so they are not currently paying the full 2.4% rate. Wouldn’t lowering the property tax rate be an incentive for more people to consider moving into the city?
The main effect of the current astronomical tax rate is that it keeps middle income people out of the city resulting in the city getting $0 in property taxes from these people!

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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