Tax sharing makes sense In perception and reality, Baltimore area is a single economic entity, and should operate like one with a revenue pool.

January 08, 1998

IMAGINE THE POSSIBILITIES: Carroll County's commissioners working with city officials to persuade a developer to erect a 40-story office tower downtown. Harford County officials celebrating the announcement that a distribution complex will locate in Anne Arundel County near Baltimore-Washington International Airport, rather than in Charlotte, N.C. Or city officials teaming up with their counterparts in Baltimore County to locate a large telemarketing operation in Hunt Valley.

Such cooperation across political boundaries is much more thinkable than it prior decades, but perhaps not as routine as it should be.

Business and local government leaders created the Greater Baltimore Alliance four years ago to help market this region as a single entity.

Its rationale: Whatever distinctions local residents make about Baltimore City or the counties around it, a business looking to move or expand elsewhere views it all as "Baltimore." The alliance has a major opportunity in May, when Baltimore hosts the Spring World Congress of the International Development Research Council, a group of corporate real estate and site selection professionals.

The formation of this non-profit alliance evolved from recognition that this region competes for business against other regions; those taking a unified approach come off as stronger, more organized and better funded. "Cooperation is one of the hardest things to do in a community," said alliance president Ioanna Morfessis, who formerly directed marketing and economic development efforts in Phoenix and in Montgomery County.

Recently, a few civic voices have proposed a form of "tax sharing" for the Baltimore region, a strategy used by some other metropolitan areas.

The case for such a program is simple: It enables all local governments to finance their growing social or infrastructure needs whenever new business locates in the region. If a percentage of the growth in commercial and industrial tax base were allocated to a regional tax fund, the entire region would reap the benefits.

Tax-sharing creates incentive to eschew the often self-defeating internal competition in a region to attract new business. It might also lessen some of the sprawl that has destryed thousands of acres of farm and forest, in turn spoiling the Chesapeake Bay. Under the present system, suburban governments -- with their generally low commercial and industrial tax bases -- encourage residential growth as a means of keeping the tax rate low and sustaining their fiscal solvency. The result is environmentally damaging sprawl and demands for schools, roads and other services that suburban tax bases cannot support alone.

In 1975, the Minneapolis-St. Paul metropolitan area instituted a program of tax-base sharing. It raised a total of $241 million by 1996.

Under the system, 40 percent of the increase -- not the total -- in commercial and industrial property tax revenues is placed in a common pool. It is redistributed to the 187 cities, towns and school districts that make up that metro region.

Myron Orfield, a Minnesota legislator and proponent of metropolitan solutions, and others believe the Twin Cities and their innermost suburbs would be much worse off without it.

On a recent visit to Baltimore, Mr. Orfield said he got critical support from the mayor of a working-class burg, a former pro wrestler known as Jesse "The Body" Ventura. Although his constituents viewed the nearby cities with disdain, Mr. Ventura became convinced that his poor, inner-suburban community couldn't turn around by itself either. (Mr. Ventura later became a talk show host and a critic of Mr. Orfield's legislation.)

Elwyn Tinklenberg, former mayor of Blaine, Minn., a town of 45,000 people about 20 miles north of Minneapolis, was also a supporter of tax-sharing. "We could see clearly that without it, the decay and poverty would have spread. Even though we were a third-ring suburb, it would have affected our town. We have slowed the spread."

Other communities have adopted similar strategies. Louisville and Jefferson County in Kentucky have had a city-county compact since 1986 that includes a tax-sharing component. Pittsburgh uses a 1 percent city-county sales tax, which is expected to raise $66 million this year, to finance museums and the zoo. Denver and five adjacent counties also have established a regional scientific and arts district to finance cultural institutions.

In the Baltimore area, two organizations with quite different perspectives on economic and community development have independently concluded that this region would benefit from a system of tax sharing.

The business-oriented Greater Baltimore Committee and the Citizens Planning and Housing Association, a long-established social action group, have both issued reports concluding that Baltimore's ills cannot be solved by the city alone. They also concur that the problems threaten to erode the economic vitality and quality-of-life of the whole region.

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