5-cent drop in tax rate likely

May 13, 1994|By Sandy Banisky and JoAnna Daemmrich | Sandy Banisky and JoAnna Daemmrich,Sun Staff Writers

Baltimore's property tax rate, by far the highest in Maryland, could fall by a nickel in July, Mayor Kurt L. Schmoke said yesterday -- while conceding that the cut carries more symbolism than savings for city homeowners.

After calls for tax relief by City Council members and taxpayers, Mr. Schmoke said finance officials had found enough savings in thefiscal 1995 budget proposal to allow a tax cut and a 2 percent pay raise for city workers.

If approved by the City Council next month, the move would lower Baltimore's tax rate from $5.90 to $5.85 per $100 of assessed value. The new rate would take effect in the fiscal year that begins July 1.

The cut would make little difference in tax bills.

Budget Director Edward J. Gallagher said the owner of home worth $45,000, the median in the city, would pay $1,063 next year, $9.09 less than this year. (For tax purposes, houses are assessed at 40 percent of their value -- $18,000 if the house is worth $45,000.)

The owner of a $100,000 home would save $20.

The tax cut might not persuade a suburbanite to move to Baltimore, but backers say it marks an effort to begin pushing the city's rate down toward those of surrounding counties. In Baltimore County, for example, the tax rate is $2.865 per $100.

"It became clear to me that the cut, even though it was a nickel, really had a symbolic significance to everybody that really far outweighed the amount of money that was being cut," the mayor said yesterday at his press briefing.

Members of the Baltimore City Homeowners' Coalition for Fair Property Taxes, a citizens group that has been lobbying for a tax cut, were delighted.

"We think it's very significant because the mayor and the City Council all worked together, and it means they recognize the need to stop the flow of middle-class homeowners to the suburbs," said Daniel J. Loden, president of the coalition.

The savings might not be great, he said, but "the real gain is in the symbolism of it." The city has shown a commitment to a

long-range plan of tax reduction, he said, adding, "That's the real significance behind the dollars and cents."

The cut could cause trouble in Annapolis next year when the city makes its annual appeal for financial aid from the state.

"Things like this just don't help," said Sen. Laurence Levitan, D-Montgomery, chairman of the Budget and Taxation Committee.

Many state legislators, tired of Baltimore's entreaties, will wonder why the city doesn't do more to help itself, he predicted.

Gov. William Donald Schaefer, who was Baltimore's mayor when the tax rate rose to $6, called the tax cut "from the city's standpoint, the right thing to do."

Still, he agreed that the cut "is going to make it harder to ask for more money next year" in Annapolis.

Sen. Barbara A. Hoffman, vice chair of the budget committee, said the tax cut should not be questioned in Annapolis. "There has to be some relief. Our tax rate is so out of line,"the Baltimore Democrat said.

"We receive state aid because we deserve it," said Sen. John A. Pica Jr., another Baltimore Democrat.

Councilman Carl Stokes, D-2nd, and Councilwoman Iris Reeves, D-5th, said the tax cut must be followed by a new long-term strategy, a dramatic shift in city financing, that doesn't rely on an annual wrestling match over tax rates.

"We're interested in a plan -- a full dollar, quite frankly -- that says we're going to be at $4.85 in the year 2004," Mr. Stokes said.

Mr. Schmoke said city budget officials still are working on the areas identified for savings -- the cancellation of the Pulaski Highway incinerator contract, a reduction in capital projects and an increase in permit fees that have not been raised for a decade.

The Schmoke administration's initial $2.2 billion budget proposal

offered no cost-of-living increases for city workers and no cut in the property tax rate.

Even a 5-cent tax cut is difficult at a time of dwindling federal resources and a decline in property tax revenues from downtown office buildings and utilities, the mayor has said repeatedly.

In the last month, however, the mayor has worked with the City Council to identify savings in the budget. Yesterday's announcement caps more than a month of exchanges with the council over the likelihood of a tax cut.

Two weeks ago, council President Mary Pat Clarke said savings from the cancellation of the city's contract with the Pulaski incinerator should be used for a tax cut.

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