Mayor Kurt L. Schmoke concedes that a 4 percent cap on residential property assessments would not benefit lower income homeowners. But he says the city's middle class and upper-middle class taxpayers deserve a break on the taxable tTC portion of the value of their homes.
"What I'm trying to do is balance the interest of some of our upper-income citizens, with our need to provide services to the poor," Schmoke said yesterday after announcing his support for the 4 percent cap.
City finance officials estimate that 70,000 people who would benefit from the 4 percent assessment cap.
The cap would help only those people whose homes values increased more than 30 percent in three years. And people in Baltimore's most exclusive neighborhoods stand to save the most from that provision.
FOR THE RECORD - An article in the final edition of Thursday's Evening Sun incorrectly stated which homeowners would benefit from a proposed 4 percent cap on assessment increases in Baltimore. All homeowners whose property assessments go up more than 12.5 percent over three years would benefit from the cap.
In making his decision, Schmoke rejected the recommendation of the city Finance Department, which urged capping assessment increases at 10 percent annually, the maximum allowed under a state law passed during the 1990 General Assembly.
Some council members were surprised by Schmoke's announcement. They said the mayor had told them he favored a 10 percent cap. "It was the first we heard about it," said City Council President Mary Pat Clarke.
Last Monday, Councilman John A. Schaefer, D-1st, was set to introduce a council bill which, like Schmoke's proposal, would have set the assessment-increase cap at 4 percent. Clarke said she asked Schaefer to hold the bill so the council could work with the administration on tax-cap legislation.
Going with a 4 percent rather than a 10 percent cap will cost the city $2.5 million in lost revenue next fiscal year, officials said.
"The amount of loss is not going to be that great, but the positive signal it is sending to middle-class homeowners is significant," Schmoke said.
"I think this is really a super move on the part of the mayor," said David B. Rudow, head of a taxpayers' group that had urged the mayor to support the 4 percent cap. "In the long run, the city just has to be competitive with surrounding counties."
Earlier this year, Baltimore County adopted a 4 percent cap on assessment increases, a move city officials said played a major part in Schmoke's decision.
Without it, "the gap between subdivisions would just accelerate," Clarke said.
Clarke explained that in addition to having a tax rate that is double Baltimore County's, without a 4 percent cap, the city would have locked homeowners into perpetually higher assessments.
Schmoke called his decision something of a gamble, and conceded that it may be frowned upon by some state legislators who argue that the city should raise as much money as possible before asking for increases in state aid.
With an election year looming, Schmoke also said that he wants to cut the city's 5.95 per $100 of assessed valuation property tax rate. He said reducing the tax burden is really the city's only hope of holding on to, and eventually building, its middle class.
Schmoke said he hoped the city would be able to compensate for the lost revenue through "belt tightening" and increases in state aid that he hopes will result from the recommendations of the Linowes Commission, a group studying the state tax structure.