A new group wants to cut Baltimore’s property taxes in the name of fairness. The town hall describes it as “absurd”. – Baltimore Sun
A new group called Renew Baltimore is proposing a plan to lower the city’s property tax rate in hopes of rebuilding the city’s population, bringing “greater economic equity” and increasing incomes and prosperity. stability.
Like almost every city, Baltimore’s biggest source of revenue comes from property taxes. The city has a property tax rate more than double that of neighboring counties, and Renew Baltimore said it has been killing economic growth and driving residents out for decades.
According to Renew Baltimore, the biggest loser is low-income, mostly black homeowners who pay a higher proportion of their income in property taxes.
Experts told the Baltimore Sun that lowering property taxes will almost certainly spur economic development. However, some were hesitant to use the word “equity,” arguing that the biggest winners would be wealthy, mostly white homeowners and outside investors gentrifying neighborhoods. Still, many said lowering property taxes might be a good idea — with some caveats.
Renew Baltimore’s ambitious plan to cut the tax rate from 2.248% to 1.25% over six years could go ahead without input or approval from elected officials. Renew Baltimore said it was gathering signatures – 10,000 are needed – for a possible referendum in November that would bypass City Hall and put the question directly to voters.
Renew Baltimore presents itself as a grassroots organization, but the group enjoys the support of high-level former city officials. Andre Davis, a former U.S. District Court judge and former city attorney, supports the initiative, as do former Democratic City Council members Rikki Spector and Carl Stokes.
The group’s treasurer, Anirban Basu, is the CEO of the Sage Policy Group, an economic policy advisory group in Baltimore.
“There are a lot of people who would like to live in the city. They want to live in the city,” said Basu, a former city dweller who lives in Baltimore County. “They can’t pay the taxes. Pensioners are evicted. Why not create a situation where more people are invited? »
Baltimore’s renewal plan calls for two amendments to the city’s charter. The first would put in place a six-year schedule for the reduction of property taxes, capping them at 1.25%. The second would remove a provision in the city’s charter that could be interpreted as a ban on tax-related charter changes.
Davis said that to his knowledge, the charter provision has never been used. “The safest thing is to remove that language,” he said.
Baltimore earned about $3.3 billion in revenue in fiscal year 2021, according to the city’s audited annual financial report. Almost 30% of that money — nearly $1 billion — came from property taxes.
During the same period, Baltimore provided approximately $125 million in property tax relief for corporate areas, historic properties, brownfield remediation and more, as well as tax credits for homeowners. .
If the change were implemented tomorrow, it would cost the city hundreds of millions of dollars in lost tax revenue for homeowners, landlords, businesses and investors. But supporters say its phased introduction over six years would soften that blow and eventually generate more revenue as people return to the city and increase the tax base.
“If you unleash the beast and let property values go up, something more like suburbanism, wealth is generated in the process,” Basu said. “I suspect very strongly that long before we implement the tax cut, you will have people flocking to the city – both to live in the city, but also to restore properties in the city.”
The Baltimore Sun asked Renew Baltimore to provide projections for the revenue increases they are considering. He refused. “We don’t take responsibility for designing solutions, designing policies and plans,” said Renew Baltimore spokesman Greg Tucker.
Mac McComas, who studies urban economic growth at Johns Hopkins University, said the proposed tax cut could strain the city’s budget for a few years, especially since the city is legally required to raise taxes. payments to city schools under the mandates of legislation known as the Kirwan Bill. A $65 million allocation was reserved in Baltimore’s finalized 2023 budget. This amount is expected to increase to $77.2 million by fiscal year 2024 and to $155.4 million by 2030.
McComas said he thinks the tax cuts will spur some development and probably won’t hurt the city’s budget in the long run, but he’s not convinced it will automatically reverse population decline or lead to better social services.
“I don’t think there’s a real silver bullet here,” McComas said.
Democratic Mayor Brandon Scott’s administration called the proposal “absurd.” The proposed tax cut would represent a $455 million reduction in the city’s budget over six years, or $75.9 million on an annual basis, spokesman James Bentley said.
“Renew Baltimore dresses its proposal in terms like ‘economic justice’ and ‘fairness,’ but the reality is that its proposal would require a drastic reduction in city services and would acutely affect the most vulnerable residents,” said Bentley.
There’s a valid argument to be made about lowering taxes to attract more development to Baltimore, but don’t call it fairness, said Nicole King, chair of American studies at the University of Maryland, County of Baltimore. To King, it sounds more like wealthy people using the word “equity” to get tax relief. True fairness would mean ending all tax breaks and public funding for private developers, she said.
“It’s about performative inclusion, which makes me very frustrated because it uses the language of inclusion and equity to essentially mask things that are inequitable,” King said.
Renew Baltimore was created as a political committee, which means funders must be made public. The only donor so far is Matthew Wyskiel, a wealth manager who gave $10,100 to the group, according to public records. Wyskiel said he was a lifelong Baltimorean who grew up in Roland Park and now lives on the border of Roland Park and Guilford. According to estimates and public records from Renew Baltimore, Wyskiel would save about $8,000 a year if the tax were fully introduced.
“I think a property tax cut is the best way to help the city of Baltimore and many, many people in the city,” Wyskiel said. “…Renew Baltimore literally helps every neighborhood.”
Much of the argument made by Renew Baltimore is outlined in a 2010 article co-authored by Stephen Walters, professor of economics at Loyola University, and Louis Miserendino, teacher at Calvert Hall High School and co-chair of Renew Baltimore .
The article argues that Baltimore in the 1950s and 1960s was on the same downward trajectory as San Francisco after World War II. Both towns were losing population, as well as manufacturing jobs, while struggling with an increase in crime. Through a statewide initiative in 1978, San Francisco reduced its property tax rates by approximately 60%. Instead of bankrupting San Francisco, the city prospered over the following decades, spurred by new waves of redevelopment and repopulation.
Meanwhile, Baltimore has steadily lost more than 350,000 residents since its population peak in 1950, falling to about 576,000 people last year, and frequently grants major tax breaks and government funding to attract projects to the town.
Walters said in his research he saw residents of Sandtown-Winchester, a low-income, predominantly black neighborhood, pay a property tax rate 20 times higher than the effective tax rate on some major developments in the center. -town. Walters called this “unconscionable.”
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Lawrence Brown said he really liked what Walters and Miserendino wrote about “predatory taxes” and their effects on black Baltimoreans. Brown wrote a book about segregation in Baltimore called “The Black Butterfly”.
Brown also sees San Francisco as an instructive model, but for a different reason. “Although they have cut taxes overall,” he said, “they have not implemented a racially fair tax plan or fair urban planning for black people in San Francisco.”
“As a result, we see black San Franciscans being uprooted and the black population in rapid decline.”
John Kern thinks a massive property tax cut in Baltimore followed by a ‘total windfall’ of development could actually hurt some longtime homeowners in black neighborhoods if safeguards aren’t put in place .
“To me, it’s a cocktail of gentrification,” said Kern, an executive with the SOS Fund, which helps residents who have fallen behind on their property tax bills.
China Boak Terrell, CEO of a nonprofit development company called American Communities Trust, called the reduction in the property tax rate a “fundamental problem in ensuring fairness”, saying it is essential to bring the development and residents in black neighborhoods.
“If Baltimore City had high taxes and it was a very safe city and had the best schools in the country, everyone would be comfortable paying higher taxes. But that’s not our current reality, is it? said Boak Terrell. “…More than any other group in the city, the high property tax affects the black working class individual the most.”