City moves to take over tax credit system after errors

Baltimore officials will now handle assessments, calculations after about $3 million in payouts needed

June 16, 2014|By Luke Broadwater, The Baltimore Sun

City officials want to hire their own assessors to determine the size of historic tax credits in response to errors blamed on the state that left some property owners with wildly inaccurate bills.

The proposal is the latest step by the Rawlings-Blake administration to resolve problems in the calculation of the tax credits for improvement to historic properties. The calculations were sometimes wrong, and some property owners wound up owing thousands of dollars more in taxes than they anticipated.

The Rawlings-Blake administration introduced legislation Monday in the City Council to hire in-house assessors to replace the state appraisals that have been used to calculate the tax credits. While state and city officials have blamed the other for the mistakes, City Council members and an activist on the issue praised the administration for taking responsibility for solving the problem.

"The city is saying, 'We'll take it over and accept responsibility and accountability,'" said Councilman Carl Stokes, chairman of the taxation committee. "I'm optimistic this will work."

Matt Gonter, a property tax credit activist who lives in Patterson Park, called the change a "good idea." He said he believed the state Department of Assessment and Taxation is "already short-staffed" and not always quick to respond to community concerns.

"The more the city is involved, the better it is for citizens," Gonter said. "It will lead to less finger-pointing."

The Baltimore Sun has detailed problems with the historic tax credit program, in which the full value of approved home renovations goes untaxed by the city for 10 years. In 2012, The Sun found, the city failed to collect more than $1.5 million in taxes because of historic tax credit errors on some apartment buildings and commercial properties.

Last year, about 315 city homeowners saw significant increases in their property tax bills after officials discovered that previous tax breaks were larger than they should have been.

The move to take over the assessments of historic improvements, restorations, and rehabilitations is the city's latest step to try to remedy the errors. Among other changes, city officials say they're doubling the staff of their Billing Integrity Unit, which monitors the process for mistakes, and have moved to an automated system to calculate the bills.

"I'm not interested in kicking the can down the road, leaving it for somebody else to fix," Rawlings-Blake said Monday.

William Voorhees, the city's director of revenue and taxation, said, "The buck will stop with the city. ... By having the system, we're going to cut 99.9 percent of the human error out of it."

Owen C. Charles, deputy director of the state Department of Assessments and Taxation, said in an email Monday that state officials support the change.

City officials have also announced that they will pay about $3 million to an estimated 300 owners of historic properties whose tax bills in coming years will be higher than what government officials told them to expect.

The mayor announced the payouts in January, but Voorhees said this week that the first checks won't go out until July at the earliest.

Michael Jackson, who owns property in the 1200 block of Bank St. in Southeast Baltimore, said he believes he's due more than $30,000. He said the process has taken longer than he expected, but he'll be glad when the check comes.

"If I get my money, that's all I'm looking for," he said.

Created in 2010 with one employee, the Billing Integrity Unit is currently staffed by three people. The unit's ranks will increase to seven employees under the mayor's proposed $2.5 billion budget for the year that begins July 1. The City Council approved the spending plan Monday.

The city plans to hire four people, including tax and revenue analysts and a data manager, at a cost of $290,000 to better catch erroneous bills. City officials estimate they've missed out on $11 million in revenue over the past decade due to incorrect bills.

The city says the Billing Integrity Unit has "recouped" $15.9 million since its inception by catching errors and preventing future mistakes from occurring.

"The Billing Integrity Unit works," Rawlings-Blake said. "When we add more staff to that office, they are able to identify errors and bring in more revenue to the city. It's a wise investment. People want us to be efficient with our resources but they also want us to collect what's due to the city."

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