Council looks to restore tax cut

Leaders weigh cuts to Dixon's budget in bid to lower property rate

May 02, 2008|By John Fritze | John Fritze,Sun Reporter

Baltimore City Council leaders said yesterday that they will attempt to restore a property tax rate cut that Mayor Sheila Dixon's administration pulled from the city's proposed budget last month.

Though the council has limited power to alter the proposed $2.94 billion spending plan, several members said they will seek to cut millions in spending in the coming weeks so the city can afford to reduce its property tax rate by as much as 2 cents, the latest step in a five-year plan to reduce Baltimore's highest-in-the-state property tax rate.

Political wrangling over the issue this year underscores the pressure city leaders are under to do something about Baltimore's property tax at a time when assessments have increased and the economy is slowing.

"We can protect the commitment that was made for an incremental property tax reduction," said City Council President Stephanie C. Rawlings-Blake. "I feel very strongly that we owe it to our constituents to find opportunities to get there."

Rawlings-Blake and other members struck a conciliatory tone, careful not to set the stage for the kind of budget showdowns that dominated City Hall under Mayor Kurt L. Schmoke's administration. But the debate could prove to be one of the most significant policy disagreements between the council and the mayor since Dixon took office last year.

"I'm not looking for a fight, but I do know that we're going to try to look at some cuts," said City Councilman Bernard C. "Jack" Young, the chairman of the council's budget committee. "We're gonna try. ... I'm quite sure we can be creative enough to find something."

In 2005, Mayor Martin O'Malley announced a plan to reduce the city's property tax rate by 10 cents over five years. So far, city leaders have followed through on the plan for the past three years - including last year, under Dixon's first budget as mayor.

For an individual year, the savings are relatively small - about $60 on a home assessed at $300,000 - and are often offset by rising assessments that ultimately leave residents paying more. Over a five-year period, the cumulative savings are more significant.

As City Council president, Dixon supported the reduction in 2005 but also sounded a note of caution, saying that the city would have to "assess it every year."

For the fiscal year that begins July 1, Dixon has said a reduction in revenues - especially those tied to the real estate market - has made it impossible for the city to continue the 2-cent cut this year. After backing away from the cut, Dixon announced more than $2 million in new spending for after-school programs.

"We're pretty confident in the budget that's been submitted, but there's always negotiating when it goes to the City Council," said Dixon spokesman Sterling Clifford. "I anticipate over the next month or so as they review it, it will go back and forth."

Bucking the mayor's proposed budget could prove to be an uphill battle for the council. While the 15-member body can make cuts, it doesn't have the final say on property tax rates - the mayor has veto power. The budget, introduced Monday, must be approved by June.

Rawlings-Blake and others suggested that they might accept a cut of less than 2 cents per $100 of assessed value - a reduction city finance officials have estimated would cost the city $5.4 million.

"I think it's very realistic," City Councilman James B. Kraft said of the council's ability to trim the tax rate. "We can't add to the budget, but we do have the ability to cut from the budget. What we would like to see is some shift in some of the priorities."

If the tax break goes forward, it would reduce the property tax rate from $2.268 per $100 of assessed value to $2.248 per $100 of assessed value. Baltimore County has the next-highest tax rate in the state at $1.10 per $100 of assessed value, less than half the city's rate.

Council members have vowed to work with the administration, in contrast to much more public budget disputes that took place in the past. When the council attempted to reduce the property tax rate in 1993, Schmoke vetoed the budget and the council passed a new budget that called for the rate to remain the same.

Not all council members are calling for the cut. City Councilman Robert W. Curran said the city should be focused on maintaining services first.

"I would be supportive of their efforts if they're able to designate where the $5 million hole in the budget would be filled," Curran said. "I believe that in the long run the citizens want to maintain the service level that they are used to from all city agencies."

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