Baltimore budget includes cab tax, pension reform

Baltimore Mayor Stephanie Rawlings-Blake will propose a $2.4 billion budget Wednesday that includes a new tax on cab rides but increases a property tax credit and includes a 2 percent pay raise for city workers.

City officials provided details of the budget plan to The Associated Press on Tuesday. It will be presented Wednesday to the city’s spending board.

According to a forecast from a consultant hired by the city, Baltimore is facing $2 billion in cumulative shortfalls over the next 10 years because of a growing gap between revenues and spending. The city would eventually go bankrupt and face a potential state takeover if it continued spending money the way it does now, the consultant concluded.

Although the budget shortfall for fiscal 2014 is a relatively modest $30 million, Rawlings-Blake’s proposal includes reforms spurred by the consultant’s report that would save more money in the future.

For the first time, the city wants to require civilian employees to contribute to their pension plans. Rawlings-Blake also wants to establish a 401(k)-style retirement plan for new hires, among other reforms to the pension system. If approved by the City Council, the changes would allow the city to raise employee salaries while still balancing the budget.

The city is also proposing changing the work schedule for firefighters and moving to a hybrid pension plan for new police officers, but those changes aren’t expected to take effect in time to save money in fiscal 2014.

The new taxicab tax would be 25 cents per ride. Rawlings-Blake is also proposing a new tax on billboards, and she wants to maintain the city’s 20 percent parking tax, which was slated to drop to 19 percent in fiscal 2014. The tax proposals would require City Council approval.

The city is proposing a 2 percent across-the-board property tax reduction, but that won’t return any money to taxpayers because of a new state-mandated stormwater management fee. However, the city is increasing a tax credit that reduces the effective property tax rate for people who live in the homes they own. Baltimore still has the highest property taxes of any jurisdiction in Maryland.

Rawlings-Blake wants to further cut property taxes, but some of those cuts would be offset by a new fee for trash collection.

Like many aging, post-industrial cities, Baltimore’s tax base has been eroding for decades. The city’s population peaked at 950,000 in 1950 and now stands at 619,000. The median income is $40,000, and 22 percent of the city’s residents live in poverty, according to Census data. Baltimore also has 16,000 vacant structures.

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