Center Maryland: Addressing Baltimore City’s high property tax rate

Baltimore City Delegate Maggie McIntosh has submitted a number of bills aimed at highlighting and addressing one of Baltimore City’s consistent challenges – a high and uncompetitive property tax rate.

Two of the bills would require the Department of Legislative Services (DLS) to study different aspects of Baltimore City’s property tax structure and make recommendations on how to achieve a fairer system.

Under House Bill 943, DLS would specifically analyze Baltimore City’s property tax structure,  factors that contribute to differing tax burdens on homeowners, renters and commercial property owners and potentially recommend measures to alleviate any undue burden on homeowners.

Under House Bill 936 DLS would  study of the economic impact and feasibility of increasing the city’s Homestead Assessment cap and using increased revenue derived from the higher cap to reduce the property tax rate.  Baltimore City currently has a 4 percent cap on the annual increase of taxable assessed value of a residence.

Meanwhile, House Bill 920 and Senate Bill 961, respectively sponsored by McIntosh in the House and Senator Bill Ferguson in the Senate, would enable city homeowners who have received the Homestead property tax credit for five years to carry over credits from the previously-owned home to a newly-purchased home in Baltimore City. The purpose of the legislation is to provide an incentive for residents to remain in the city.

All three House bills, which the Greater Baltimore Committee supports, are being considered by the House Ways and Means Committee, which heard testimony on February 27.  Senate Bill 920 is before the Senate Budget and Taxation Committee, which heard the bill on March 13.

The most significant challenge facing Baltimore City is the need to expand its tax base and to grow the middle class. During the 1990s, Baltimore City lost an average of 8,500 residents per year. Over the past 12 years, Baltimore City is the only jurisdiction in the region to experience a decline in population, losing 30,000 residents between 2000 and 2012, many of whom were middle class income earners.

Mayor Stephanie Rawlings-Blake has made attracting more city residents and retaining existing homeowners a top priority of her administration.

Perhaps the most compelling factor that impacts the Baltimore City’s ability to meet that challenge is the city’s high property tax rate, which is at least twice the tax rate in any neighboring jurisdiction.

There have been many studies and efforts to look at how to reduce the property tax rate. In 2007, then-Mayor Sheila Dixon convened a Blue Ribbon task force of civic leaders, on which I served, to review the tax structure and formulate recommendations for improvement. In its final report, the task force contended that a reduced property tax rate could “unlock the city’s unrealized potential” and trigger increased economic activity in the city.

The city has made some efforts to reduce property taxes since then by making small tax-rate reductions in several different budget years – most recently two-cent rate reductions in each of the last two years. The city’s current property tax rate is $2.248 per $100 of assessed value, compared to the next highest property tax rate in the region: $1.10 per in Baltimore County.

However, with the city’s property tax rate at more than twice that of its neighboring jurisdictions, it will take a considerable period of time to reduce the rate to a level that it is low enough to make the city competitive.

None of the bills submitted by Delegate McIntosh is a panacea. The passage of any or all of them will not, in and of itself, solve the problem. However, collectively they highlight the property tax issue and start the conversation about how to make Baltimore City more competitive with other jurisdictions.

A restructuring of the property tax system would provide a genuine opportunity to grow the city’s population, its tax base and the middle income class in Baltimore.

Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland. This column originally appeared in Center Maryland on Friday, March 14.  

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