Debate stirred in city on size of property tax cut

Proposals by two council members call for bigger trims than mayor's plan

April 05, 2006|By JOHN FRITZE | JOHN FRITZE,SUN REPORTER

With Baltimore's budget at its strongest point in decades, city officials are considering three proposals to reduce the property tax rate - stirring a debate about how much of a tax cut is enough.

Weeks before the City Council begins its review of the $2.38 billion city budget, members introduced proposals yesterday that would trim property taxes more than the 2-cent reduction proposed by Mayor Martin O'Malley.

Supporters of the deeper cuts say residents should be rewarded now that the city has posted a budget surplus for two consecutive years.

Others argue that the money could be used to improve city services - or could be put aside.

Administration officials said yesterday that the council cannot cut the property tax beyond O'Malley's proposal without first reducing spending in the budget. Technically, the city's Board of Estimates sets the tax rate based on the budget that the council approves, officials said.

But Councilman Edward L. Reisinger, whose South Baltimore district includes areas where property assessments have shot up this year, argued that residents and business owners who stuck it out when budgets were lean should get a break.

"For 10 years, we had a deficit and we couldn't help taxpayers," Reisinger said. "I think we owe it to the people."

Reisinger introduced a 5-cent reduction yesterday, which would save a homeowner about $75 on a $150,000 house.

As part of the fiscal 2007 budget, which takes effect July 1, O'Malley proposed reducing the property tax rate 2 cents this year and phasing in further reductions in the future. For the $150,000 home, the administration's proposal would save $30.

Despite rate reductions, many homeowners could wind up paying a higher tax bill this year because assessments are rising.

Councilman Nicholas C. D'Adamo Jr. introduced a separate bill yesterday that would cut the rate 10 cents - the largest reduction pending before the council. His bill would save a homeowner $150 on a $150,000 house.

"I'm a firm believer that, since we're having a good year, that the taxpayers deserve a credit," D'Adamo said.

The property tax cuts would cost the city from $5.5 million to nearly $28 million, council members said.

If council members were to approve reductions beyond the mayor's proposal, they would have to find the money by cutting the mayor's proposed budget.

O'Malley administration officials warned yesterday that the city's financial boom, brought on by the real estate market, is showing signs of weakening. Approving large tax reductions now, they say, could hurt city services in the future.

"This economic boost is not going to last forever," said O'Malley spokeswoman Raquel Guillory. "We have to do the fiscally prudent thing and phase [tax cuts] in ... not rush to do it all at once."

john.fritze@baltsun.com

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