Baltimore Mayor Young stays neutral on potential PILOT overhaul

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Baltimore Mayor Bernard C. “Jack” Young is declining to say whether he supports renegotiating a tax deal with the city’s major nonprofits to help the cash-strapped city cover several major expenses.

Young, during a his regular news conference on Wednesday, would say he respects the City Council’s freedom to investigate the potential to hash out a new deal in light of major expenses facing the city. Baltimore hammered out a deal in 2016 with most of its tax-exempt anchor institutions requiring those nonprofits to pay the city $6 million annually through 2026.

“I appreciate the council for looking at other revenue sources that would help us with all the looming budget issues that we’re facing,” Young said.

Baltimore faces the potential of having to pay settlements from scores of lawsuits stemming from the criminal endeavors of the police department’s Gun Trace Task Force. Maryland is also considering how to implement the education reform recommendations of the Kirwan Commission, which some estimate will cost the city $330 million over a decade.

Councilman Eric Costello, chairman of the council’s budget committee, introduced a resolution on Monday calling for a hearing to discuss with the nonprofits the feasibility of renegotiating the pact.

The deal, according a 2016 Baltimore Sun article, covers Johns Hopkins Hospital, Johns Hopkins Bayview Medical Center, University of Maryland Medical Center, University of Maryland Medical Center Midtown Campus, MedStar Good Samaritan, MedStar Union Memorial, Mercy Medical Center, Sinai LifeBridge, St. Agnes Healthcare and Bon Secours.

The arrangement also covers Johns Hopkins University, Maryland Institute College of Art, Notre Dame of Maryland University, and Loyola University Maryland.

The pact replaced a 2010 agreement that required the institutions to pay $20 million in decreasing amounts through the life of the deal. In the final year of the 2010 pact, according to city budget documents, nonprofits paid the city roughly $1.06 million. The most recent deal stipulates annual payments of $6 million.

Funds from the deal are categorized as payments in lieu of taxes, which according to the Baltimore Development Corp., allows “a business, landowner or developer to substitute the annual real estate taxes due on a property with a negotiated payment for a limited time period.” In Baltimore, as elsewhere, schools and hospitals typically are not subject to local property taxes by virtue of their nonprofit status.

Baltimore’s property taxes provides the city’s largest revenue source. In fiscal year 2020 property taxes projected to provide roughly 50% of the city’s projected revenue. The anchor institutions included in the pact who are some of the city’s largest commercial property owners.

Nonprofit institutions also pay various city taxes such as the energy and telecommunications taxes. But revenues from those taxes, from residential, nonprofit and commercial users, were projected to provide nearly 4% of city revenues.

Employees from the organizations who live in the city also contribute via their income taxes. Funds from that levy are projected to provide more than 18% of city revenues this year.

Baltimore currently has the highest property taxes in Maryland but has made an effort to reduce those charges in a bid to attract more residents. Earlier this year Baltimore fulfilled a goal set by former Mayor Stephanie Rawlings-Blake in 2010 to reduce property taxes by 20 cents by 2020.

Young, who recently announced he will run to keep the position he inherited this spring after former Mayor Catherine Pugh resigned amid an ethics scandal, has repeatedly said he will not raise taxes to pay for the city’s expenses.