Baltimore City's high property tax rate faces new assault from

Daily Record, The (Baltimore), Dec 10, 2004 by Ezra Fieser

John Maynard said his jaw dropped the first time he opened his property tax bill.

At roughly $800 monthly, the tax effectively wiped out any savings he saw in his monthly mortgage payment after moving from Washington to Baltimore in search of cheaper real estate.

But the thing that really gets Maynard is this: He could live less than two miles north, just over the Baltimore County line, and his tax bill would drop by more than $300 per month.

I'm paying $800 a month basically to get my trash picked up, said Maynard, a trained social worker who commutes to the Washington suburbs. The city is not creative. Everything is placed on the back of the homeowner.

Maynard was outraged enough to form 1.86% by '06, the latest grassroots attempt to influence City Hall to drop the property tax rate. Baltimore's rate of $2.328 per $100 of assessed value is by far the highest rate in the state and ranks 11th nationally, according to the nonprofit Tax Foundation. The organization wants it reduced within two years to $1.86, which still would be the most expensive in the state.

Longstanding gripe

The new group is not the first to challenge the rate. Other organizations, most recently the Baltimore Homeowners Association, made it a top priority, albeit to no avail. According to the city's annual operating budget, 30 percent of its annual revenue - roughly $526 million - comes from property taxes.

And with the city school system emerging from the red and the mayor claiming the budget is already lean, a change to a major revenue source is unlikely, said City Councilman Keiffer J. Mitchell Jr., D.

I don't see it being feasible right now in terms of the fiscal situation that the city is in, said Mitchell, chairman of the council's taxation committee. With the economy still slow to recover, I haven't heard anything from the finance department about a drop.

However, Mitchell said he would be in favor of such a reduction.

I would love to see it. I think it's something we should definitely explore, or come up with other creative ways to keep the revenues, he said. It's a matter of what the consequences are though. I have neighborhoods that would suffer from a reduction of trash services, for example. It's a fine line we have to walk.

With changing demographics and the real estate market booming, other cities, namely Washington, Pittsburgh and Denver, have cut property tax bills and gained new residents.

In Baltimore, however, the rate has remained effectively unchanged, although the formula by which they were levied changed three years ago.

People are tired of that sad song our city sings 'we're broke, we're broke, we're broke,' Maynard said. People are tired of the city not doing anything about it.

Alternative taxes

Instead of simply reducing the tax rate to $1.86 per $100 of assessed value, the organization, which is still in the formative stage, is also devising roughly 20 alternative taxes or fees that would make up what it says will be a $20 million reduction in revenue.

It's about shifting the burden from the homeowners, he said of the alternatives, which include a parking tax and an entertainment tax.

Other cities that have cut property taxes have seen an influx of new residents. It's a selling point, Maynard said, instead of a deterrent.

Home buyers, particularly the important first-time buyers, consider total monthly costs when make a decision to buy and the city's high tax rate can be a repellant, a real estate organization representative said.

It puts the squeeze on people, said Carolyn B. Cook, deputy executive vice president for the Greater Baltimore Board of Realtors. It's a huge detriment for people going into Baltimore. The amount of taxes they'll pay and the amount it'll cost them to get in is a major issue.

The 1.86% by '06 organization will start its campaign with a letter-writing drive aimed at pressuring city officials to at least consider reducing the rate.