Bowing to pressure from the City Council and homeowners, Mayor Kurt L. Schmoke said he will submit legislation on Monday that would limit increases in assessments -- the taxable portion of a home's value -- to 4 percent a year.
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.
Before yesterday's announcement, Schmoke appeared to favor the 10 percent cap, several council members said. Just a month ago, Schmoke told the council that he planned to introduce legislation that would set the cap at 10 percent, said City Council President Mary Pat Clarke.
"It was the first we heard about it, so we asked him to hold off and let the council work with the administration on what impact this would have on revenue to the city," Clarke said.
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.
But Clarke asked him to hold it a week to give her a chance to discuss it with the mayor.
"I decided to withhold the bill out of courtesy to her and the mayor," Schaefer said.
Clarke said Schmoke did not make up his mind on the 4 percent cap until late Tuesday night. He announced his decision yesterday at a Board of Estimates meeting.
"Maybe I and the council will get some credit for giving the mayor impetus to act on the 4 percent cap," a rueful Schaefer said after yesterday's announcement.
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.
Schmoke said the revenue loss would be compensated for through on-going "belt-tightening" and an expected increase in state aid.
"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.
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.
"But there is some hope that this also provides a stimulus," Schmoke said. "In the long run, this will help us more."
Schmoke said he hoped the city would be able to compensate for the revenue lost to the cap through "belt tightening" in government and increases in state aid that he hopes will result from the recommendations of the Linowes Commission, a group studying the state tax structure.