Baltimore City Council members? recent decision to slice a few pennies from the property tax rate may give certain people good campaign slogans. But do council members really think the almost nonexistent rate drop will attract new residents or businesses to the city when taxes remain double or nearly double those of surrounding jurisdictions?
The disparity means the city must continue to offer huge tax breaks to businesses to lure them to the city, to incent them to develop property or to help them decide to stay here. The proposed $33 million break for the developers of $500 million plus Harbor East is one of the most recent examples.
It also means property will remain disproportionately attractive to those who don?t pay property taxes ? nonprofits. Statistics show nonprofit employment as 29 percent of private-sector employment in the city ? nearly three times the average for the state.
Employment does not directly correlate to taxes as not all nonprofits own property. But 21 percent of $12.6 billion of property in the city is exempt from taxes ? more than $727 million of it belonging to Johns Hopkins, according to Owen Charles, the city?s supervisor of assessments. If the $2.6 billion of exempt property could be taxed, it would generate $61 million each year. And that?s not counting all the lost revenue from businesses that would choose to locate here if the economics made the city a viable alternative.
In no way do we begrudge nonprofits? presence in Baltimore City. Aside from their work in the community and the international prestige places including Hopkins generate, nonprofit employees who live in the city pay income taxes that help support city government.
But so long as property taxes remain twice as high as surrounding jurisdictions, businesses will have a huge disincentive to choose Baltimore. So will young professionals ? the kind of people the city wants to attract ? who will continue to enjoy the city?s restaurants and entertainment but park their cars in the counties each night.
Is it merely a coincidence that California and Massachusetts, where property taxes are capped at the same rate throughout the state, are home to some of the most vibrant U.S. cities? When taxes are the same in the county or the city, choosing an urban business address or home makes sense.
City Council members need to make Baltimore City make sense for the region?s residents and the thousands expected to move here through the Base Realignment and Closure process by at least halving property tax rates.
They could then sit back and watch the flood of new residents and businesses fill the city treasury with their tax contributions. That would not only provide great campaign fodder, it would make this city a better place to work and live.
