Despite deficit, mayor’s budget proposal includes property tax cut

Despite having to close a roughly $60 million budget gap, Baltimore Mayor Stephanie Rawlings-Blake‘s proposed budget includes a tax cut for homeowners and maintains funding for demolishing vacant homes.

The mayor, who is not seeking re-election, introduced her $2.64 billion operating budget to the city’s spending board on Wednesday. That represents a roughly $91 million increase from the current fiscal year.

In a briefing with reporters on Tuesday, city staff discussed highlights of the budget. But actual copies of the spending plan were not made available until the Board of Estimates meeting.

The proposed budget, which the Board of Estimates and the City Council must approve, includes a one cent property tax cut that would drop the rate on owner-occupied homes to $2.12 per $100 of assessed value.

Property taxes in the city would remain the highest in the state, but on course to fulfill Rawlings-Blake’s 2011 pledge to drop taxes 20 cents by 2020.

The city is anticipating property taxes generating $873 million in revenues in fiscal year 2017. That’s an increase from the $857 million projected for the current year and $61.5 million more than what the city actually received in fiscal year 2015.

The city’s property taxes are assessed in three groups. Phase one, which was the most recent assessment group, took into account the norther tier of the city as well as downtown, said Andrew Kleine, the city’s budget director.

Combined, the commercial and residential assessments in those areas increased 10.9 percent, which is the statewide average. That breaks down further to a 4.9 percent residential increase and 21.4 percent commercial increase.

Assessment growth, however, doesn’t automatically translate into a windfall in revenues for the city. That’s because the increase in residential taxes are phased in over three years, and tax credits can reduce revenues from commercial properties.

“Overall we’re still phasing in the increases we saw in groups two and three we saw over the last couple of years. But overall it’s about a 2 percent increase from ’16 budget to ’17 estimate,” Kleine said.

To plug the budget deficit, Rawlings-Blake seeks to eliminate 226 vacant positions in the Baltimore Police Department; reduce funds going to Community Action Centers; restructure health benefits for city workers; and negotiate changes to payment in lieu of taxes agreements.

To cover the costs of funding the free Charm City Circulator bus service downtown, the mayor proposes raising the parking tax from 20 percent to 24 percent.

The budget maintains $10 million to address blighted vacant homes in the city. That amount is in line with the strategy in the city’s 10-year financial plan to spend $100 million to get rid of the vacant homes.

But the city is also about to receive a big investment from the state to help address blight.

Last year Gov. Larry Hogan pledged funds, through Project C.O.R.E., which stands for Creating Opportunities for Renewal and Enterprise, to help the city tear down vacant homes.

The four-year partnership involves $75 million in state funds and will total nearly $700 million, including economic development funds.

“The state had called for the 4-to-1 match, and we were already putting $10 million in, which is above and beyond the match … the state requires,” Howard Libit, a spokesman for the mayor, said.