City reaches slots pact that could cut tax

Up to 8-cent drop would be years off, Dixon warns

The Dixon administration and the group bidding to build a slots parlor in Baltimore have reached an agreement that could generate enough money to slash Baltimore's property tax rate by up to eight cents, officials said.

"It looks like this process is going to move forward," said Mayor Sheila Dixon. "The goal was to try to reduce property tax. I know that we've got to do our best to get some [property tax] relief."

If all goes as planned, the reduction in the property tax rate - now $2.268 per $100 of assessed value, by far the highest rate in the state - would be the largest single cut in recent memory. When he was mayor, Gov. Martin O'Malley made two-cent reductions in 2005 and 2006. Dixon reduced the rate by two cents in 2007.

But Dixon cautioned Wednesday that the slots facility will not fund a property tax reduction until the casino is in place. "We are not going to see it tomorrow," Dixon said. "We don't want to misguide people. This is not money we are going to see for a couple years."

Under the agreement, the casino would provide ground rent to the city via a profit sharing agreement on gross gambling revenues, and those funds won't begin to flow until the casino is operating, which city officials hope will be in 2011. The money from slots must be used for either property tax reduction or school construction, so those funds cannot be used to eliminate expected budget shortfalls in those years.

City Council President Stephanie C. Rawlings-Blake is "pleased" by the deal, said her spokesman, Ryan O'Doherty. "She is especially excited about the real potential for significant property tax relief, not to mention the public education funding and job creation benefits that this new facility will bring to the citizens of Baltimore."

Kevin Johnson, an officer with the bidders, Baltimore Entertainment Group, declined to comment. His group was the only one to bid on the Baltimore site.

According to the deal, the bidders will pay the city $20.8 million when the casino opens, which includes ground rent, property taxes and other revenues, said First Deputy Mayor Andrew Frank. That would provide a minimum five-cent reduction in property taxes. Since the revenue is based on the casino's performance, Frank said, the city's share could grow.

Within five years, the city predicts total slots-related revenues to grow to about $25.4 million a year, which could be used to reduce Baltimore's property tax rate by nearly eight cents, Frank said.