Donald Fry: City’s best revenue option? Growth.

By Donald C. Fry

How many times have you heard an official in Baltimore City lament, as did one to a newspaper reporter last week, that “the city doesn’t have many opportunities when it comes to generating new sources of revenue”?

Baltimore City’s two largest local revenue sources – the property tax and local income tax – are already set at the highest rates in the state.

That’s a big reason why city leaders are so anxiously awaiting progress in the development of a slots casino in the city. Slots proceeds, they point out, could deliver new revenue to enable the city to ease its property tax rate back from its current level of 2.268 percent – more than twice that of any of the surrounding counties.

But the ultimate source that would deliver the city a fresh, healthy new revenue stream isn’t slots or finding new ways to ratchet up taxes or city fees. City leaders must rededicate themselves to increasing city revenue the old-fashioned way – through economic growth.

Ironically, the city is not without opportunities to do just that as it emerges from the recession.

No shortage of assets
Nationwide, there is a renewed interest in urban living and Baltimore has been at the lead in that changing demographic dynamic.

For instance, after five decades of population decline during which Baltimore City lost a third of its residents, the city’s population erosion slowed to a trickle this decade and now appears to have stopped. Under the right circumstances, the city could be poised to rekindle the mini-boom in residential and economic activity that was under way before the recession hit in 2008.

Between fiscal 2000 and 2007, city government revenue derived from local taxes increased by 46 percent – a 6.6 percent average annual increase – and overall city revenue increased by 36 percent. Since 2007, the city has realized less than half that level of annual local tax revenue growth and overall revenue to the city has decreased.

Baltimore City leaders must not presume that once the recession is over the city will automatically return to pre-recession revenue trends. They should work diligently to create a business environment and quality of life for residents that will set the stage for reviving and building on the kind of economic performance in the city that evaporated during the recession.

The city remains the cultural and economic urban center of a region that will see an influx of more than 15,000 BRAC-related military and civilian jobs during the next 12 months at Aberdeen Proving Ground in Harford County and at Fort Meade in Anne Arundel County. The city is seeking to capture a portion of BRAC residential and business growth and to draw new customers to the city’s many cultural, recreational and entertainment attractions.

In addition to its ideal location, Baltimore City has significant assets, including attractive neighborhoods, world-famous art museums, theaters, a symphony, a zoo, superior health care, renowned higher-educational resources, major league sports and its signature waterfront.

Extraordinary opportunities
For all of its challenges, Baltimore is fully capable of economic and job growth.

The key to energizing this potential is for city leaders to create optimal market circumstances – for business location, for job creation, and for new residents.

Everyone in the region and state has a stake in Baltimore City fully realizing its potential for growth. The economic health of a region is directly affected by the economic health of its urban core. Among Maryland regions, the Baltimore region continues to have the most jobs and the largest workforce, according to June 2010 U.S. Department of Labor statistics.

Elected officials are fond of characterizing their work on economic issues as “fighting” for jobs and growth as if job creation is some kind of adversarial exercise.

Economic development is highly competitive and can be akin to a contact sport. But without question, the best way to bring about economic stability and job growth is to nurture a business environment and quality of life that puts a city, region, or state in a position to successfully compete for jobs, and then let private-sector market forces do the rest.

Baltimore City leaders must resist the temptation to try to make jobs happen and embrace the concept of letting them happen. They must nurture business, economic and job growth, not try to force it.

Like all urban areas in the U.S., Baltimore has its challenges. But it also has world-class strengths and, along with all jurisdictions in the Central Maryland region, is perfectly positioned for some extraordinary opportunities in the coming decade.

Ensuring that Baltimore creates the welcome business environment and quality of life to seize those opportunities should be at the top of the agenda for city leaders in the foreseeable future.

Comments are closed.