For years Marylanders have coddled Baltimore City. If the state were a business, Baltimore would be the perpetually underperforming, excuse-making, subsidized division run by the boss’s child.
Until now, it’s been untouchable. That time needs to end if Maryland wants to revive its faltering economy. State unemployment is 6.9 percent — the highest in 17 years, in large part because Baltimore keeps shedding jobs.
From February 2008 to February 2009 the city lost almost 13,000 jobs, or 5 percent of its employed workforce. For this, the state will reward Baltimore because payments to local jurisdictions have little relation to what each contributes.
Instead, the state distributes most aid inversely to local wealth, so the poorest jurisdictions get more. That gives city officials no incentive to reform their high tax and spend ways, because they know state taxpayers will fill in their self-inflicted shortfalls.
In the 2010 fiscal year state taxpayers will send $1.2 billion to Baltimore in direct aid of the $6.5 billion total pot going to Maryland’s 23 counties and Baltimore City. That is 1.3 percent less than the previous year – but only because all state aid to counties is falling this year.
Since 2003, state aid has grown every year, as high as about 12 percent in three of those years, with Baltimore grabbing the lion’s share of it. In the upcoming year it works out to about $1,875 per person. By comparison, residents of Montgomery County will receive $756 per person in state aid; Baltimore County residents $868; and Howard residents $1,019.
On average, counties receive $.37 on every dollar they send to the state in taxes, according to the Department of Legislative Service’s December “Balance Sheet.” Baltimore rakes in $.96.
So, that means taxpayers around the state pay for residents of Baltimore City to drive on state roads, receive medical care, attend state colleges at subsidized rates, enjoy a clean Chesapeake Bay, pay state employee salaries and everything else the state does for its citizens, but that Baltimore tax contributions do not pay for.
Sure, the economy is bad this year. But that is not the issue. Baltimore has been failing for years. But Baltimore’s officials have few obvious reasons to reform: They rake in too much from the status quo, and they don’t need to grow business to benefit. In fact, they would be punished for contributing to the state’s well-being!
Maryland taxpayers need to stop rewarding its failure. The most recent statistics show that the city shed over 3,000 jobs in January and February, according to the Department of Labor, Licensing and Regulation (DLLR).
The loss of the taxes associated with those jobs means Marylanders will be even more on the hook for the city than before.
In good times, maybe this was tolerable. But these are not good times and the state faces $1 billion-plus deficits in coming years –funny, about the same amount as the state sends to Baltimore each year. If Baltimore was not such a drag, Gov. Martin O’Malley, if so inclined, could have rejected federal stimulus dollars.
For the benefit of all the state’s residents, Gov. O’Malley and state legislators need to wean Baltimore from the dole. That means tying at least some aid to meeting performance standards.
That could drive up support in the short run as Baltimore reforms its tax and regulatory structure, but it will benefit everyone in the state in the long run.
First and foremost the city needs to lower its property taxes, more than twice as high as the rest of the state. DLLR statistics show a much smaller percentage of those employed in the city also choose to live in the city compared to those working and living in other jurisdictions.
For example, 35.6 percent of those who work in Baltimore City live there. In Montgomery County 47.9 percent of those who work there also live there; 43.9 percent of those who work in Baltimore County also live there.
Multiple factors affect the decision to live in the same place as work, including the quality of the school system, but property taxes matter. Combined with local income taxes — some of the highest in the state — and struggling schools, it’s as if the city built a fence around its border to keep people out.
Marylanders need to tear that wall down with high expectations combined with aid policies that tie money to meeting standards. Maintaining the status quo is a life sentence of failure for Baltimore and all of Maryland.
Examiner columnist Marta H. Mossburg, a resident of Baltimore City, is a senior fellow at The Maryland Public Policy Institute.
