A Tax Cut That Makes Sense

June 14, 1995

It is difficult in an election year for some members of the City Council to resist the urge to pander for voters' affections. Such a temptation almost led to council approval of another nickel reduction in Baltimore's property tax Monday night. Fortunately, that did not happen.

There has been no evidence that such a small tax break -- $9.18 for the average Baltimore household -- translates into fewer people leaving or moving into Baltimore. But it would cost the city at least $4 million in basic services.

It made more sense for the council and Mayor Kurt L. Schmoke to instead agree to repeal Baltimore's beverage container tax. That, too, poses a risk at a time when the city must be concerned about future federal aid losses. But the tax unfairly singled out Baltimore residents, including some of the state's poorest citizens, and forced them to pay more for their beverages. Baltimore County repealed its beverage container tax in 1991, a year after it was enacted.

Mr. Schmoke has found ways to cut other expenditures so as to absorb the $1.1 million cost of initially reducing the bottle tax. The next mayor must find ways to make up for the greater revenue loss when the tax ends in 1997. But ending the tax could increase beverage sales and thus provide a needed boost to city businesses.

Those who rightly want to improve home ownership in the city should keep in mind that the budget does keep intact one of the most generous homestead tax breaks in the state. There is a 4 percent cap on the amount of growth that will be considered in assessing owner-occupied residential property. That will provide $6.1 million in tax relief to 48,000 homeowners, which is about a third of all homeowners in Baltimore. Also continued will be the city's Settlement Expense Loan Program and the City Employee Home Ownership Program.

Budget writing is tricky for any big city today. Baltimore's continuing population loss has eroded its tax base and drained it of middle class families. The federal government has decreased the funding it makes available to urban areas and the Republican Congress is threatening even more Draconian cuts. Against this backdrop, the mayor and council have come up with a prudent $2.3 billion budget that retains current services.

The budget's modest growth of 2.9 percent represents a realistic analysis of Baltimore's revenue picture in the coming months. An anticipated 9.7 percent increase in state aid makes it all possible. Still, most city departments will not see their budgets grow by much, if at all.

The Police Department will get a 3.5 percent increase, raising its budget to $184.5 million, which should add 15 officers to the force. That will bring to 135 the number of additional officer positions authorized since 1994. Filling those positions is important. Reducing crime will do more to stabilize home ownership than another nickel property tax reduction.

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