The cost of a lower city property-tax rate
Calls to cut the city's high property-tax rate have been long-standing and numerous. What's grabbed attention more recently is the idea of slashing it in half.
An economist at Loyola University Maryland suggested that such a move would revitalize Baltimore, pointing to good effects in cities -- such as San Fransisco -- that years ago had big cuts imposed upon them by voters. Councilman Carl Stokes, a mayoral candidate, proposed halving the rate over three years.
Now the city's Finance Department has weighed in, saying the only way Stokes' plan wouldn't dent revenues is if more than 500,000 new residents move in.
That's the equivalent of two-thirds of the people who left the city in the last 60 years coming back.
Colleague Julie Scharper had the story over the weekend, and I figured you'd all be interested in chewing over this newest development. As you might expect, supporters of a lower rate don't agree with the Finance Department's conclusions. They think it overstates the needed expansion.
Stephen Walters, the Loyola professor, said the report ignores a variety of financial benefits from an increase in residents, including more jobs, businesses and vacants-turned-rehabs. He told Scharper that the report was "really bad economics."
Joseph T. "Jody" Landers III, the mayoral candidate who runs the Greater Baltimore Board of Realtors (update at 9:15 a.m.: he's leaving that job to run full-time) and is suggesting a rate reduction over the next four years of 25 to 35 percent "or more," also fired back.
He put a scathing statement on his campaign website from David B. Rudow, founder of the Baltimore Efficiency and Economy Foundation. Rudow sat on a blue-ribbon panel -- which Landers co-chaired -- that in 2007 proposed ways to reduce the city's property-tax rate.
The report offered 11 suggestions to achieve major property tax rate reductions. The city implemented several of the suggestions - increasing the City’s piggyback income tax and hotel tax to the highest rates in Maryland, and taking advantage of several new state transfer tax laws - but failed to reduce the property tax rate even a penny.
We are long past study time – it is time for action. In addition to the destructive real estate tax rate on homeowners and businesses, city business are also overburdened with a huge nearly 6% annual tax on all personal property located in the City. We need to get competitive to survive.
The thing about a big tax-rate cut is that it's a jump into the unknown for Baltimore, one that would make most budget directors -- who like predictability -- gasp and gulp.
Walters' plan tries to address that by proposing a charter-amended guaranteed cut at a certain point in the future -- say, four years -- so the city could start amassing a fund to cover any gaps at the point of slashing. The idea is that people would start moving in before the cut, to buy properties before the prices presumably rise in tandem with the rate reduction, and the extra money would be funneled into the rainy-day fund.
So: Thoughts? Do those of you who were in favor of such a move (most of you, judging by this poll) still think it's doable?