Baltimore City needs a reality check on proposed fees, regulations

 

By Donald C. Fry

Last week, the Baltimore City Council continued its recent frenzy of proposing well-intentioned legislation with potential, often unintended, consequences that could harm businesses.

In just the last two weeks, the Council has either proposed or acted favorably on bills to ban foam carryout cups and food containers, impose a fee on plastic and paper bags and, ironically, to limit service fees for buying tickets to concerts and sporting events – all of which would likely serve to increase the cost of doing business in the city or reduce potential revenue generation from sports and entertainment events that provide significant revenue to fund city services.

Also, the City Council passed a cumbersome bill to encourage local hiring by city vendors that, in addition to being unlikely to withstand constitutional muster, will instead impose impractical and costly bureaucratic requirements on them and, according to many business owners, will likely not result in increased hiring of city residents.

Meanwhile, the Council appears poised to impose stormwater fees – a so-called “rain tax” – that will be significantly higher on businesses located in the city than fees to be charged by any other jurisdiction in the state.

This fee-focused flurry of activity and regulation under the City Hall dome has left business advocates scratching their heads and wondering: “What in the world are they thinking?”

Following is a quick rundown on the latest round of proposals emerging on Holliday Street.

Last Monday, a bill was introduced that would impose a 25-cent fee for each paper or plastic bag city businesses provide customers for their purchases. The bill’s sponsor, Councilman Brandon Scott, said he intends to lower his proposed fee to 10 cents, reports Baltimore Sun reporter Luke Broadwater.

The bill is supposedly intended as a deterrent to littering. Store owners would be responsible for collecting the fees and would be subject to penalties for late payment to the city.

It’s disappointing Mayor Stephanie Rawlings-Blake, who opposed such a fee when she was president of the City Council, told the Baltimore Sun she is now “open” to the fee.

Interesting, the proposed legislation would exempt food stamp users from the fee. While I understand the reason for such language in the bill, giving any type of exemption from this fee serves to confirm that the issue isn’t really about littering – it’s about revenue generation for the city budget.

Also this week, a city council committee sent a bill to the council floor that would ban the use of polystyrene foam products by carry-out food service businesses in the city. Violators could be fined up to $1,000.

This bill is an effort to reduce foam cups and boxes that wash into the harbor, according to its sponsor, James Kraft. Though well-intentioned, the bill would increase costs for businesses, which point out that foam containers are less expensive than other types of carry-out containers and are not harmful. The reality is that the increased cost to business will only result in an increase in cost to city consumers.

City Council president Jack Young does not appear to favor the legislation. He told Broadwater that littering is a “people problem” and inferred that the council can’t solve the problem by banning all potential litter. One would suggest the same logic applies to the “bag fee” legislation.

Interestingly, Councilman Scott and Kraft both say their proposals are needed as a deterrent to littering. It’s worth noting littering is currently against the law in Maryland, including Baltimore City, and carries penalties of up to 30 days in jail and fines of up to $1,500 for most who would litter.

All of this begs us to ponder the ultimate question to City Council members who would support imposing fees on bags or banning foam cups as a deterrent for littering: Do you really believe the best way to control the behavior of customers is to punish the merchants?

On a different note, City Councilman Carl Stokes introduced a bill not to increase a fee, but to cap service fees charged for concerts and entertainment. This bill was introduced as a consumer protection measure. But, as Baltimore Sun editorial writers have correctly pointed out, such a law could trigger the unintended consequence of driving popular entertainment acts away from Baltimore City, costing city venues millions in economic activity, not to mention decreasing tax revenue to the city.

Meanwhile, the Council will soon consider a number of potential amendments, exemptions, fee caps and credits relating to proposed stormwater fees but, if enacted, the city’s base fee for businesses – $2,490 per acre of impervious surface — would still remain the highest by far in the state.

Since the General Assembly is widely expected to take some kind of remedial action next session on the stormwater-enabling legislation it passed in 2012, it might be more prudent for the city to enact an initial fee structure for businesses that is essentially equivalent to Baltimore County’s fee.

In potentially enacting a significantly higher stormwater fee than the county that surrounds it, the city once again would risk placing itself at a significant competitive disadvantage as a business location.

It’s disappointing that the administration has not taken a more active stance for business competitiveness on these fee-related issues. Such proposed policies are clearly not in sync with the mayor’s goal to bring 10,000 new families to the city.

Baltimore City has significant positives as a place to live and work – with many attractive and affordable neighborhoods, cultural institutions, attractions, superior health care and numerous other amenities. But it is well documented that city residents and businesses already live with high property taxes and high piggy-back income taxes, along with public safety and public school system challenges that detract from Baltimore’s many positive attributes.

When faced with the prospect of placing burdens and additional costs on the business sector that ultimately drives its economy and job creation, the city’s executive and legislative leadership must remember to perform a reality check of our competitors and refrain from piling on the fees and hurdles that will only exacerbate the city’s business-related competitive challenges and damage the perception of doing business in Baltimore City.

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