The city's shortsighted tax cut

May 16, 1994

As everyone knows, two things in life are certain: taxes and death. Since not even politicians can do much about death, they are constantly playing games with taxes. Up they go -- only to come down before elections.

But wait, this is not a municipal election year in Baltimore City. So why has the City Council cornered Mayor Kurt L. Schmoke into proposing a cosmetic 5-cent property tax cut?

This is an interesting -- and alarming -- question. It again underscores how superficially the City Council understands tax matters. It also shows how politically insecure Mr. Schmoke is feeling now that City Council President Mary Pat Clarke has announced she is a mayoral candidate. Since she was hell-bent on a tax cut, the mayor had to pre-empt her.

This is not responsible fiscal management.

Baltimore City's property tax rate of $5.90 is by far the highest in Maryland and roughly twice as high as the burden paid by homeowners in any of the surrounding counties. In the best of possible worlds, the city should halve it.

But that utopia is yet to come. In reality, the city is facing increasingly difficult times. Residential and commercial property values have plummeted. When homes in Guilford and Roland Park, two of the city's most exclusive neighborhoods, are reassessed next year, the decrease in the tax base is going to be so shocking it is certain to make alarm bells ring all over town.

The council opted to ignore that reality -- and the mayor caved in. In a shortsighted decision, a $6.4 million capital budget account was reduced to $993,000 so that property owners could be given a meaningless cut and municipal employees a 2 percent raise. A $4.2 million fund balance -- the city's rainy day fund -- was raided.

This is fiscal irresponsibility of the highest order. The city will not have an emergency fund at a time when bonding agencies require that a city with a budget as large as Baltimore's should always carry a surplus balance somewhere between $24 million and $40 million.

If the politicians' expedient behavior now leads to a lower bond rating for Baltimore City, citizens will soon get a rude awakening. The owner of a $100,000 house may save $20 in taxes this year. But how about next year, when disaster strikes for municipal services?

A high tax rate is only one of Baltimore City's problems. We believe citizens tolerate it as long as they know that their city's basic services are functioning. By skimping on routine maintenance and cutting services, the City Council is adding to Baltimore's long-term woes.

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