The city hasn't the money to pay for what services it provides now. What will offset the loss of revenue that this proposed rate-lowering will create?

Or is Dr Basu volunteering to be the one to tell the police, who regularly go about armed, that they won't be being paid?

The City's tax rate is the 900 pound gorilla in the room; however, the fact that the City is a Democrat-run bastion is a major contributing cause to the problem. In any (rare) year that there is a surplus, Democrats will surely tend to spend it, rather than plan for the future by lowering the tax rate, which will result in short term pain but eventually puts more vacant or underutilized properties to work and leads to an investment that pays greater dividends in the future by establishing a solid tax base on which the social burden can be shared more fairly. Elsewhere in the country, if one paid $6000/yr in property tax (even in a district that had a stellar school system), people would be screaming about it. Yet, in Baltimore they put up with $12,000 and even $20,000 tax bills with no real benefits to show for it. Speaking of schools, that leads to my other hypothesis, which is that the main base of outside people who will buy into Baltimore City are investors, young professionals, and empty nesters -- basically anybody who doesn't have school-age children. Unless you're a social progressive willing to put your child into the public school system, then private school tuition is an additional "tax" burden that must be factored in for the privilege of living in the City.

Couldn't agree more. The city tax rate is a joke and is one of many reason why so many city residents are looking for greener pastures. Like I have said before, I am looking to move out and the cost of a much more expensive mortgage in a nicer area is actually less expensive than my current mortgage because of the taxes. The reasons for moving into the City are becoming less appealing everyday.

I have been looking to buy in the city since I moved to MD in 2001. Its the tax rate! lower the tax rate! and you will see more rehabs, more businesses, more people etc. I'm an engineer and work in the city but can't afford to live there. Seriously my house in the county is about $225k. I pay about $2500 in taxes. The same assessed home in the city ($225k) would be about $5100/year that's $425/month. I dont have! without getting a part time job. Look at other cities around the nation that lowered the tax rates! To the city leaders are you making the best decisions for yourself or for the city?

I voted YES to lower it but it won't happen. No one elected to city office has the courage to take such a potentially risky step. Why risky? Because for the first several years revenue will decrease.

Baltimore City is a victim of the lack of foresight. Most cities with a population the size of Baltimore are part of a larger surrounding county that serves as a broader catchment area for tax revenue. Just remember Baltimore City owns the local reservoirs and it may one day be necessary to cut off the supply of water to surrounding counties until they pay up.

as professional with a graduate degree you can count me among those who bought in the county because of the tax rate. it's ridiculous

Imagine how deeply shocking it would be to Democrats and Republicans alike if City Council suddenly said, we're cutting taxes. We are rewarding property owners and home-owners in the city. Nothing would send a bigger message to the entire region that the welcome mat is out, come on in.

The tax rate has been killing this city for years. Besides people not buying here because of it, they also move out when it is time to upgrade. A 20 something with a good job can buy a nice $200,000 house here with no problem. BUT when that 20 something gets into his 30s, gets married and is ready for the next size house it is NEVER Baltimore City. Because for the tax rate on $500,000 house ($12,000 a year) - you could use that extra $1000 a month to pay a new car payment or two. I have a historic tax credit on my current house that runs out in 8 years. 7 years from now, my house will go on the market and I will move out of the city unless something drastic happens to the property tax rate.

Mr. Basu has a very valid, and simple point: You cannot tax people who don't live here. If we could incentivize city living through tax credits, we'd have more people living here, helping local business, etc.

Brent: then what would the City do?

As much as the city needs the income taxes of these prospective home buyers (even more than the RE taxes) were the city to actually have this sudden influx of a public services expectation laden citizenry...

Be careful what you ask for you may just get it.

Whenever the subject of cutting real estate taxes comes up someone always mentions the effects on police and firemen. What Baltimore needs to do is cut all the non-essential stuff. You don't need to give code enforcement people fancy new high-end digital cameras, a parking enforcement person on every corner, an aggressive city advertising campaign, new school computers every 6 months, or safety nets on top of safety nets. The city needs to get back to basics. Taxes are just one problem that needs attention.

Personally, I'd love to check out the aquarium since I haven't been in well over a decade. However, the city scares me. I just won't go there.

The tax rate was a huge reason why I decided not to buy in the city. Just didn't make sense to pay twice the taxes for half the house.

Here's a question: WHY is "Baltimore City" a separate jurisdiction than Baltimore County? Could Baltimore City be absorbed into Baltimore County at the state level to bolster its balance sheet?

Cleveland, for example, is within Cuyahoga County. Why on earth did they ever separate it?

Excessive property tax is a "right to exist" tax. Whether you pay for it directly through home ownership, or indirectly through rent. As a tax, it makes no more sense then a tax on food.

I'd like to live in the city but I can't because city taxes would eat away a sizeable portion of my income (~10%).

PFR, St Louis Mo is the only other large City with the arrangement that Baltimore has. Richmond Va is similar but for different reasons as all cities in VA are independent.

Why is based in a series of shifts in political power. Since the decline of industry and a city populated by generally well paid (and well taxed) citizens that power has shifted away from the City.

There has been a fairly consistent percentage of Baltimoreans who for a very long time have advocated simply turning in the Charter to the Governor (though generally tongue in cheek) and by that action forcing the State (by way of Baltimore County) to absorb it.

There's clearly a lot of frustration about taxes, mainly because nothing seems to change. I wonder what the residents can do about it. Can neighborhoods succeed from the city, and form their own jurisdiction? I don't think this is unheard of.

As a Realtor, I have a bunch of clients who were interested in the city, but when you are buying a $300k house in Canton and it has a $6k a year tax bill, when that same tax bill in B.Co. would be $2k, it becomes tougher to sell.

I don't understand the point of "you cannot tax people who don't live here." There are vacant units, but those vacant units are $10k hovels. Just because they can't sell the house doesn't mean they aren't paying taxes.

And there's NO WAY B.Co. would "absorb" the city. Would you voluntarily take over the debt of your deadbeat cousin? Why would the county have any desire to deal with the problems (and costs) of the city? It's bad enough Canton, Roland Park and Federal Hill subsidize much of the rest of the city. You think Monkton, Perry Hall and Hunt Valley want to do the same?

The city can immediately reduce the overall property tax rate and recover any lost revenue by doing the following:

1) Crack down on all homestead cheats by collecting back taxes, penalties, and interest for any years in which property owners were wrongfully claiming the homestead credit.

2) Discourage people from cheating on the homestead credit in the future by pursuing perjury charges against the most blatant cheaters (e.g. those who own multiple properties in the city and claim the credit on all of those properties).

3) Follow Washington DC's lead and raise the property tax rate for all vacant properties by 800% or more. With over 30,000 vacant properties throughout the city, this would seem to be a no-brainer.

I moved to Baltimore from Washington, DC where real estate prices are very expensive...I was not congnizant of the tax rate here due to the fact that I was a first time homebuyer....I got a very good deal in Baltimore regardless of the tax rate.....However, If the taxes should ever go up or I decide to purchase a more expensive house, I may have to leave the city.....Could this be a subtle form of red lining?

Do we really need an economist to tell us this? It obvious. The tax rate in Baltimore stinks and the value provided in exchange is not there.

You want to know how to pay for a 30% reduction? Eliminate pension benefits for government workers.

I'd agree with Basu's position that property taxes are too high and need to be lowered, but as a city resident myself have to say there are many other reasons to not live here such as parking, constantly having to look over your shoulder even in the "good areas," streets that look like the surface of the moon, filth blowing everywhere to the point I fear catching a disease just living here, a notoriously bad school system that necessitates budgeting for private schools if you at all care about your kids, a corrupt police force that has threatened to arrest me for point out that a cop ran a red light in a non emergency situation and threatened the arrest of dozens of patrons at Couburns for not clearing out the bar fast enough, and an absolute joke of a mayor and government in general.

Anyone care to actually read a copy of the 2009 budget? It's long, cumbersome, and watered down with all kinds of filler, but you can pull some guts out of it: http://www.baltimorecity.gov/government/finance/downloads/2009/Fiscal%202009%20Citizen's%20Guide%20to%20the%20Budget.pdf

To boil it down: They split the total 3 billion dollar budget roughly in half into two separate budgets, a general fund of about 1.5B, and a capital budget of about 750M. Property taxes make up roughly half the general fund revenue. Public safety, education, and pensions/retirement plans make up the #'s 1, 2, and 3 expenses.

Roughly speaking you could trim property tax rates by 30% simply by eliminating pension benefits for government workers. We don't get them in the private sector, so why should they? That of course is without even digging into the questionable spending repaving side streets as smooth as glass while major thorough fares remain a disaster, or the fact that many city cops shouldn't be on the force, or one I thought of for trash collection: do it apartment complex style-one dumpster per 4 blocks. If your neighbor is old or disabled and you don't want trash piling up next door to you: take care of them.

If the tax rate were lower, the tax base would be much larger and the city's tax revenue would increase. That's how you get even more money to pay for city services! Such was the effect when San Francisco and Boston lowered property taxes 30 years ago.

Half the reason Balto real estate is so cheap is the high real estate taxes.

You *can* tax people who don't live here. The vast majority of the real estate value in Baltimore is owned by people (or things!) that don't live here.

http://en.wikipedia.org/wiki/Land_value_tax

As far as Cheap Jim's comment, what if we change our whole approach to crime and decriminalize drugs? I mean 40 years of beating our heads against the wall and getting nowhere pretty much proves that point. Then you could probably cut the police force by a third and 300 people wouldn't die every year.
Also why don't we put term limits on public housing. Five years to get your act together unless you have a disability.
Finally, why doesn't the city start charging non-profits property tax. No more free rides. This includes churches also.
A minority of us seem to pay for quite a lot freeloaders.

The average city homeowner pays over $100/month just to pay for the pensions of city employees.

Based on an average assessed value of 200k I was extrapolating from the budget. Think of that, $100 every month to pay for someone else's benefit that the majority of us don't get.

The point that non-profits need their property holdings taxed is a valid point. I work at the cities largest non-profit and the cities largest employer. People make the point that they create jobs which boosters the local economy and add to city tax revenue indirectly. However that assumption is false. Many of the people working for these large non-profits live in the suburbs where the state maintains much of the infrastructure and their taxes do not pay for their wear on city infrastructure. I don’t know how many time I have been on a road in Baltimore County or Anne Arundel County and seen that they have state road maintenance. This means that the local governments do not maintain the roads. Because we need to maintain the current system while lowering property taxes there are 2 things that need to be done.

1) Tax all land/property holdings. This includes that of non-profits. This can even be done with giving smaller less affluent non-profits a break in the rate. I know JHU has the money to pay taxes on their new 12 story towers.

2) Create a municipal authority to maintain area infrastructure for the entire Baltimore metropolitan region. This includes roads, mass transit, sidewalks, water, sewer, and other aspects of infrastructure for areas considered by the US Census to be in the Baltimore metropolitan area. This includes Baltimore City, Northern Anne Arundel County, Baltimore County, some parts of Howard, and Harford Counties. This will take the cost of infrastructure out of the hands of the city and state and create a blanket tax for the entire region. This will lower city property tax rates by sharing the cost of maintaining the area’s heavy infrastructure. By the way…even though the state does not maintain the roads and other infrastructure in the city, city residents, including myself, pay a .112 percent property tax to the state above any beyond the 2.26 percent.

I can certainly say that when the day comes to sell my home in Baltimore, I would not consider Baltimore again due to the tax rates. I was also a new buyer to the area and the taxes I was aware of when I bought in 2005 were $4500-$5000 a year and then the 3 year bubble-affected reassessment kicked in and the property taxes doubled, and that's on what would be considered a very modestly priced house in the DC metro area. Can't agree more that one does not see the service levels one should reasonably expect to see resulting from the high taxes-- on the contrary. Don't know enough about Baltimore finances to know what it's spent on, but it certainly isn't the schools.

Homestead exemptions just do not cut it either. They discriminate against people who maintain and improve Baltimore housing stock and permit the city to continue to maintain the artificially high rate.

Yes the city needs to reduce the property tax. It is a clear dis-incentive for people of means to move here.

The city has MANY counter productive incentive systems.