If Baltimore City were a Hollywood star, it would be Pamela Anderson. The city is pumped full of Botox and reshaped by the plastic surgery called tax incentives for developers, and it keeps going back to the same husband it dumped numerous times — high taxes.
This may be sustainable for a while, but eventually she and the city will get old and need someone or something reliable to take care of it. For the city, that time is now.
Its top finance official, Ed Gallagher, said as much last week.
“Taxing at current rates does not generate sufficient revenue to support the cost of services,” he wrote. “For example, 1 cent on our property tax rate yields $2.7 million. One cent in Baltimore County raises $6.9 million and 1 cent in Montgomery County raises $18.0 million.”
Translation: The city’s high property tax rate — more than twice as high as all others throughout the state — not only doesn’t work, it makes things worse.
We’ve been saying the same thing for almost three years now, but we’re glad those whose policy horizon extends only to the next election are catching on.
The fact that it took a financial meltdown for the epiphany is testament to the decades-long failure of leadership in the city.
Gallagher said revenue from falling real estate transfer taxes fell 31 percent in November compared with the previous year, a result of falling home sales. A similar drop is expected for recordation taxes. While home sales will eventually recover, not even in boom times was the city able to attract new residents and businesses — the key to broadening the tax base and raising revenue. In fact, it has been losing jobs and people for decades.
It is not for a lack of trying. Baltimore has handed out tax breaks, cash and other “incentives” to special interests. We do not fault the recipients of those breaks for asking for them. But we do fault the city for not learning from its mistakes.
It can right years of wrong by mapping out a path to cutting property taxes in half or lower in steps to match surrounding counties. A tiered approach would prevent huge temporary budget holes and simultaneously encourage people to invest in the city, as they would know their properties would increase in value as taxes dropped and demand increased for them. It might even help to immediately offload some of the many new empty condos sitting on the market right now.
As Gallagher noted, we’ve reached a point where raising taxes will no longer meet the cost of running the city. Cutting property taxes is the sure way to grow the population and the treasury, and to allow the city to thrive for decades to come.
