Schmoke endorses 4% property tax cap Council also looks at cut in tax rate

November 15, 1990|By Martin C. Evans

An article in yesterday's editions of The Sun incorrectly stated that Maryland law prohibits Baltimore and the 23 counties from setting a cap of less than 4 percent on real estate assessment increases. In fact, the municipalities may limit assessment increases to any level of 10 percent or less, according to the Maryland Department of Assessments and Taxation.

Endorsing an election-year tax relief plan for Baltimore, Mayor Kurt L. Schmoke announced yesterday that he would support a proposal to adopt the lowest possible limit on property tax assessment increases permitted under state law.

The cap, which would limit annual assessment increases to 4 percent, could cost the city as much as $2.5 million per year in lost revenue,according to the Department of Finance. An estimated 71,000 Baltimore homeowners would realize property tax savings.


"It appeared to me that the amount of [revenue] loss would not be that great but the signal to the middle class would be significant," Mr. Schmoke said. "We want to keep people in the city."

The mayor's announcement was immediately hailed by members the City Council, who then made it clear that they would propose additional tax relief measures in the form of a reduction of between 7 cents and 10 cents in Baltimore's property tax rate of $5.95 per $100 of assessed valuation -- more than twice the rate of any other Maryland subdivision.

Likewise, David B. Rudow, president of the Baltimore CitHomeowners' Coalition for Fair Property Taxes, praised the mayor's willingness to put the lowest possible limit on assessment increases. Still, he said his taxpayers group will continue to push for a reduction in the property tax rate.

"It tells the taxpayers taxes will not continue to skyrocket indefinitely," said Mr. Rudow, who in a meeting with Mr. Schmoke last weekurged the mayor to adopt the minimum cap. "We must ultimately make ourselves competitive with the rest of the state. One state, one rate is what is fair."

The two-pronged approach -- known as "cut and cap" -- is intended to get at both sides of the property tax equation: the property tax assessment, which leads to increases in taxes when property values increase, and the property tax rate itself, which is proposed by the mayor and passed by the City Council.

Prompted by statewide voter protests over skyrocketing property assessments, the General Assembly last session reduced from 15 percent to 10 percent the maximum amount that tax assessments could increase in a single year. At the same time, lawmakers allowed Baltimore and Maryland's 23 counties to provide additional relief by setting their caps even lower.

Baltimore County immediately lowered its cap to 4 percent. Howard, Anne Arundel, Harford and Carroll counties are expected to consider reductions of their own by the end of the year.

In Baltimore, though, Finance Director William R. Brown Jr. urged the mayor to adopt the full 10 percent assessment cap, saying that the city could ill-afford to lose revenue given its tight budget and the possibility of slower revenue growth due to a weak economy.

The next budget, to be presented in the spring and passed by the end of June by the council, will be the last before the mayor and the 19 members of the council must face the voters in the 1991 municipal elections.

"This is what I hear people screaming about when I go out to community meetings," said Councilman John A. Schaefer, D-1st, chairman of the council's Budget Committee.

A bill that would set a 4 percent cap was scheduled for introduction before the council last Monday. But Mr. Schaefer, the bill's author, delayed its introduction in the hopes that the mayor could be persuaded to go along with the lower rate. The bill is expected to be introduced on Monday.

Not all council members were quick to embrace Mr. Schmoke's decision to back the lowered assessment-increase cap. Some argued that the lower tax cap might force further cuts in services such as libraries, street cleaning or health care vital to inner city neighborhoods.

"Any cut in services will effect my district more than any other, because it does encompass so much of the inner city," said Councilman Lawrence A. Bell, D-4th, who said the change in the mayor's position took him by surprise. "But I'm willing to follow his lead if he has analyzed this and thinks it is prudent."

Councilman Carl T. Stokes, D-2nd, said that while he believes tax relief is vital to the city's future, cutting taxes too quickly could allow lawmakers representing other jurisdictions to argue that the state should not be asked to divert more money to Baltimore at a time when city lawmakers are spurning revenues.

"I think we eventually ought to get there but that 4 percent is too much too soon," Mr. Stokes said. "I'm afraid the state legislators will say 'to hell with them.' "

However, Mr. Rudow of the taxpayers group said that the lower assessment cap will begin to reverse the psychology of many homeowners who feel that, with Baltimore's rate at least twice as high as that of any other jurisdiction, they no longer can afford to remain in the city.

"The mayor has shown a really long-term view of things by proposing a 4 percent cap," Mr. Rudow said. "It would have been easier for him to just take the dollars that a higher cap would have generated, but that would have been destructive in the long run."

While Mr. Schmoke was vague about how the city might make up for the potential revenue loss, he said yesterday that giving hope to beleaguered city homeowners is so important that the city should take its chances on finding alternative sources of revenues.

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